The days of not having to worry about student loan payments affecting your debt to income ratio when applying for a home loan are coming to an end.  Before, with FHA home loans, if you had student loans that would be in deferrment or forebearance for at least 12 mths after the projected closing date for the property you were purchasing, the lender did not have to include those future loan payments as part of your current debt.  FHA has made changes that will go into effect with all lenders on any loan applied for on or after June 30, 2016.  This change means that if you have student loans in deferrment or forebearance, the future payment for that loan will now need to be counted as a part of your current debt. Lenders will need to obtain written documentation of what the actual monthly payment for that loan will be.  Then the lender must use the greater of:

- 1% of the outstanding loan balances: OR

- monthly payment reported on credit report; OR

- actual documented payment, provided that payment will fully amortize the loan over its term

Why is this change important for future home buyers?  Because the lender bases your maximum purchase price of a property on your debt to income ratio.  So a higher amount of debt could decrease your purchasing power and in some cases, prevent you for qualifying to purchase what you really desire.  For example, if the outstanding balance on your deferred student loans is $15,000, then you would be looking at adding a min of $1500/mth to your monthly debt.  Debt to income ratios, including the new home loan payment, would need to be about 45 to 48% for FHA financing approval.  So the higher your monthly debt (before the home loan payment), then the lower the new home loan payment can be (which could mean you have to purchase a lower priced home).  

If you think you will be impacted by this change, and are ready to purchase a home, contact a lender immediately to inquire about purchasing prior to the change.  I am here for additional questions as well.

Source:  FHA.gov