how is student loan debt calculated for mortgage

Best answer


Student loan debt is often considered in your DTI ratio, a formula mortgage lenders use to help assess your creditworthiness as a borrower. This ratio is calculated bydividing your monthly debt payments by your monthly gross income, which yields a percentage value that lenders then scrutinize to evaluate your ability to repay a mortgage.

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  • How do Mortgage Lenders calculate estimated student loan payments?

  • On the other hand, if you鈥檙e currently making student loan payments or expect to be within 12 months of your closing date, your mortgage lender is required to do some math to come up with an estimated payment. This formula is 5 percent of your remaining student loan balance divided by 12 months.

  • How does student loan debt affect a mortgage application?

  • Student loan debt is often considered in your DTI ratio, a formula mortgage lenders use to help assess your creditworthiness as a borrower. This ratio is calculated by dividing your monthly debt payments by your monthly gross income, which yields a percentage value that lenders then scrutinize to evaluate your ability to repay a mortgage.

  • How much student loan debt should you have before buying a home?

  • This will vary according to the payment required on your student loans. It will also vary based on the type of mortgage for which you鈥檙e applying. Generally, a good rule of thumb for how high your debt ratio can be, including your student loan payments, is 43%.

  • How much is my student loan payment on my credit report?

  • Monthly student loan payment as listed on credit report or student loan statement; if deferred or in forbearance, either 0.5% of balance or one monthly payment Monthly student loan payment as listed on credit report or student loan statement; if deferred, in forbearance or on IDR plan, either 0.5% of balance or one monthly payment

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