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Qualifying for a Mortgage with Income Based Repayment (IBR) Student Loans

Qualifying for a Mortgage with Income Based Repayment IBR Student Loans

Getting a Mortgage with Student Loans

Qualifying for a mortgage when you have IBR student loans can put you on quite a roller coaster.  The underwriting guidelines have changed several times in the past 2 years, and have left many lenders unable to keep up.

After the most recent update, here are the loan programs that will allow you to use income based payments:

  • Fannie Mae Conventional MortgageAllows IBR payment.  Document repayment status with credit report.
  • Freddie Mac Conventional Mortgage – Allows IBR payment.  Must document repayment status with credit report.
  • FHA MortgageNo IBR payment.  Payment must be fully amortized or use 1% of balance as qualifying payment.
  • VA MortgageNo IBR payment.  Payment must be fully amortized or calculate balance by 5%, divided by 12.
  • USDA MortgageNo IBR payment.  Payment must be fully amortized or use 1% of balance as qualifying payment.

Loan officers that have been unable to keep up with these guidelines will most often quote the 1% of the balance calculation when qualifying a home buyer.

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As you can see by scrolling through the hundreds of questions and answers below, there is a lot of misinformation out there about this topic.


FindMyWayHome.com Podcast:  How to Buy a Home with Student Loans?

I am joined by Josh Lewis of BuyWise Mortgage as we discuss  the recent changes in how student loans are calculated into your debt to income ratios when qualifying for a mortgage.

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How to Qualify for a Mortgage with Income Based Student Loan Payments

Posted by FindMyWayHome.com on Wednesday, July 26, 2017

Click Here for Show Notes and Valuable Links


Article Originally Published March 16th, 2016

We’ve been following this issue since the beginning.

As more Millennials are looking to buy their first home, many are faced with the challenge of student loan debt and how lenders calculate payments when determining debt to income ratios.

Unlike other types of debt that include monthly payments of principal and interest, student loans often have reduced or deferred payments that do not include principal repayment.

Specifically, Income Based Repayment (IBR) plans limit your federal student loan payments to a percentage of your income. These plans can go a long way towards making payments manageable for young professionals just entering the workforce at entry level salaries. For those with very low income, payments can be as little as $0.

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This is where things get interesting for mortgage lenders seeking to make sound underwriting decisions. Should they calculate debt to income ratios using the payment set under the IBR plan?

Or, since the payments must eventually rise if the loan is ever to be paid off, should they use some type of proxy for a fully amortizing payment?

The answer depends on the type of mortgage you are applying for. Since the vast majority of borrowers with student loan debt aren’t looking at Jumbo loans, we’re going to focus on the different ways Fannie Mae, Freddie Mac, FHA, VA and USDA answer this question.

If you love details, you can read the entire guideline in italics. If you like to get right to the point, skip to the BOTTOM LINE in bold.

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IBR Using a Conventional Fannie Mae Loan

UPDATED April 25th, 2017 – Fannie Mae has recently updated its guidelines to allow borrowers to use the payment that appears on your credit report.  That can be an IBR, PAYE, or REPAYE payment that does not pay off your loan at the end of the term.

If no payment is reported on the Credit Report, the lender must use one of the options below to determine the repayment amount:

  • 1% of the outstanding balance;
  • the actual payment that will fully amortize the loan(s) as documented in the credit report, by the student loan lender, or in documentation supplied by the borrower:
  • a calculated payment that will fully amortize the loan(s) based on the documented loan repayment terms: or
  • if the repayment terms are unknown, a calculated payment that will fully amortize the loan(s) based on the current prevailing student loan interest rate and the allowable repayment period shown in the table below.

The current prevailing student loan interest rate’ can be found on a variety of websites. For example. see U.S. Department of Education Federal Student Aid in E-1-03. List of Contacts.

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The following table specifies the repayment period to be used when calculating a fully amortizing payment.

Calculating a Student Loan Repayment

Total outstanding balance of all student loans Repayment Period
$1— $7.499 10 years
$7.500 — $9.999 12 years
$10.000 — $19,999 15 years
$20.000 —$39.999 20 years
$40.000 — $59.999 25 years
$60,000 + 30 years

Note: The lender is responsible for determining that the payment on the credit report or other documents provided by the student loan lender or borrower are fully amortizing payments.
Example: Calculating an Amortizing

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Payment Balance: $17.500
Repayment period: 15 years
Interest rate: 4.29%
Monthly Amortizing Payment: $132.00

BOTTOM LINE:  Use the actual amortizing payment. If you are unable to document the actual amortizing payment, use the calculated payment using the method above as it will nearly ALWAYS be less than 1% of the balance. If ALL ELSE FAILS, use 1% of the outstanding balance.

IBR Using a Conventional Freddie Mac Loan

When a monthly payment on an installment debt is not reported on the credit report or is listed as deferred, the Seller must obtain documentation verifying the monthly payment amount included in the monthly debt payment-to-income ratio.

If no monthly payment is reported on a student loan that is deferred or is in forbearance, and there is no documentation in the Mortgage file indicating the proposed monthly payment amount (e.g., the loan verification letter), 1% of the outstanding balance will be considered to be the monthly amount for qualifying purposes.

Examples of documentation of the required payment amount include:

  • A direct verification obtained from the creditor
  • A copy of the installment loan agreement obtained from the Borrower, or
  • If payments are currently deferred, the payment amount that will be required once the deferment or forbearance period has ended, as stated in a copy of a financial institution’s student loan certification or the installment loan agreement

While the Freddie Mac seller guide has not changed since the publishing of this article, we have spoken directly to Freddie Mac and received confirmation that they will in fact use the IBR payment when calculating debt to income ratios.

BOTTOM LINE:  Use the documented IBR payment as long as it is greater than zero. For any loans with no payment, including IBR loans, the lender must fall back to the forbearance guidelines and use 1% of the outstanding balance unless you are able to provide documentation verifying the proposed monthly payments will be less than 1%.

IBR Using a Government FHA Loan

FHA 4000.1 Section II. A. 4. B. (H)

(4)  Calculation of Monthly Obligation

Regardless of the payment status, the Mortgagee must use either:

  • the greater of:
  • 1 percent of the outstanding balance on the loan; or
  • the monthly payment reported on the Borrower’s credit report; or
  • the actual documented payment, provided the payment will fully amortize the loan over its term.

BOTTOM LINE:  Unless you are able to provide documentation from your lender showing the actual payment that would amortize your loan in full over a fixed loan term is less than 1% of the balance, the lender will use 1% of your outstanding loan balance as the payment.

IBR Using a Government VA Loan

Student Loans (5/1/2017)

  • Deferred Student Loans: If student loan repayments are scheduled to begin within 12 months of the date of VA loan closing, lenders should consider the anticipated monthly obligation in the loan analysis.  If the borrower is able to provide evidence that the debt may be deferred for a period outside that timeframe, the debt need not be considered in the analysis.
  • Student loans in Repayment:

If a student loan is in repayment or scheduled to begin within 12 months from the date of a VA loan closing, you must consider the anticipated monthly obligation in the loan analysis.

The anticipated monthly obligation should use the greater of:

Calculated payment at a rate of 5% of the outstanding balance divided by 12 months (example:  $25,000 student loan balance x 5% = $1,250 divided by 12 months = $104.17); or the payment reported on credit report

Standard Repayment Plan: The required monthly payment is to be used for qualification purposes.

If a monthly payment is not reflected on the credit report or there is need for the payment amount required for qualification purposes, documentation, as evidenced by a letter from creditor or repayment schedule, is required to verify monthly payment.

BOTTOM LINE: Use the above formula for to calculate any payments that are not fully amortized to pay off at the end of the term.

IBR Using a Government USDA Loan

If the borrower has a student loan with an income based repayment, you must use 1% of the balance. Below you will find the guideline directly from the USDA underwriting manual:

Student loans. Lenders must include the greater of

  • One percent of the outstanding loan balance. OR
  • The fixed payment as reflected on the credit report.

Income Based Repayment (IBR) plans; graduated plans, adjustable rates, interest only and deferred plans are examples of repayment plans that are subject to change and do not represent a fixed payment or repayment plan. These types of repayment plans are unacceptable to represent a long term fixed payment repayment plan.

WHAT DOES IT ALL MEAN?

VA and USDA loans are both limited. Unless you are a veteran or buying in a “rural” area as defined by the USDA, these loans aren’t an option. If they are, the good news is both have straightforward, borrower friendly treatment of IBR plans.

For most people, the question will come down to which programs you qualify for and then which offers the most favorable income based repayment calculation. If you need to use FHA due to lower credit scores or higher debt to income ratios, things just got a lot tougher.

After offering guidance earlier this year allowing the use of IBR payments, the current guidelines require documentation of the actual amortizing payment or 1% of the outstanding balance will be used. In either case, the payment used for qualifying will be higher than the current IBR payment.

If your loan balance is relatively large, this treatment will likely erase much, if not all, of the benefit of FHA’s higher debt to income ratios.

If you are able to qualify using Fannie Mae or Freddie Mac programs, you have a good bit more flexibility. In most cases, a borrower that can be approved through Fannie Mae’s automated underwriting system (AUS) will also be approved through Freddie Mac’s AUS.

This is great news if you have an IBR payment that is greater than zero. Freddie will use the IBR payment reported on the credit report so you should be home free.

If you are working with a lender that ONLY offers loans underwritten to Fannie Mae guidelines OR you have an IBR payment of $0, Fannie has an option that will not be as bad as using 1% of the balance.

Let’s look at an actual scenario for a borrower I’m working with right now.

She’s looking to buy a home for $350,000. Her income is just over $72,000 per year. She just went through the annual review on her IBR plan and for the next 12 months she pays $146 a month on roughly $117,000 of student loan debt. If you’ve been paying attention up to this point, you see where this is going.

Since she has good credit and her debt to income ratios are under 45% using the IBR payment, we’re in luck. We can use Freddie Mac guidelines and pull the $146/month from the credit report and she’s good to go.

WHAT IF, her IBR payment had been set at zero? In that case, we could look at going FHA. Under current guidelines we simply use 1% of the $117,000 loan balance as the monthly payment. The bad news is this pushes us over the maximum FHA debt to income ratio of 56.9%. That doesn’t work so let’s move on to Fannie Mae.

Assuming her lender would not give us documentation of a fully amortizing payment AND her loan documentation doesn’t provide enough information for us to calculate the amortizing payment, we have to use the calculated method using the ‘current prevailing student loan interest rate’.

Using the chart above we see that we use a 30 year term and the current prevailing interest rate is 4.29%. That leaves us with a monthly payment of $578. Even though the calculated payment is much higher than the actual IBR payment, we can keep the debt to income ratio just under the maximum 45% and approve the loan.

The bottom line is, “it’s complicated.” But there are options and if you’re working with an experienced loan officer who understands the intricacies of student loan qualifying guidelines, there should be an option for you. As always, we’re here to help. If you have any questions, or specific scenarios reach out directly or in the comments section below.


Fannie Mae Guidelines Updated March, 2017

Student loans and mortgage qualifying are indeed a hot topic. Since first posting this article in March 2016 both FHA and Fannie Mae have made significant changes to their treatment of Income Based Repayment student loans as recently as April 2017.

Some of the changes will help those with IBR student loans while others most certainly will not.

There are questions and answers in the comments section of this article every day.  This information is always kept up to date, and will always have the most current guidelines.

Feel free to ask your questions below, or reach out to us directly if you have specific questions, or would like an introduction to a lender that has experience with these guidelines and can help.

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About Josh Lewis

For 20 years, Josh Lewis, a Certified Mortgage Consultant, has worked with home buyers and their professional advisors to assure that homeownership is a key foundation to long term wealth creation by creating and implementing custom tailored mortgage plans that minimize ownership costs while maximizing wealth accumulation.

281 Comments

  1. Alexandra Martinez on October 10, 2017 at 11:45 am

    Hello,
    I was interested in a home loan and I am under the income based repayment program with my loans to be forgiven in approx 4 years. I am looking for a mortgage in Flagstaff Arizona. Any help would be excellent.
    Thank you.
    Sincerely,
    Alexandra

    • Scott Schang on October 10, 2017 at 12:02 pm

      Hi Alexandra,

      I have a very experienced lender friend that can help. I have your email, I’ll make an introduction by email. Either Grant, or someone on his team can definitely help you!

  2. Natasha Royal on July 28, 2017 at 10:23 pm

    I am currently on an IBR payment 146k in student loans. My monthly payment is about $150 a month for my student loans. My dti is good, credit 709. However a lender entered my info for a loan and it was rejected. The lender said it may be since my loans are higher than thAn what they were initially were due to interest. He now has to go through a manual underwriting and says it’s only a 25% I may get approved. What are my other options if I’m not approved.

    • Scott Schang on July 28, 2017 at 10:49 pm

      Hi Natasha, your simply doesn’t have any experience with these guidelines. Using conventional financing, you can use your IBR payment. If they are talking about manual underwriting, they are using FHA.

      Send me an email to scott@findmywayhome.com and let me know what State you’re in. Let me introduce you to someone that has experience with these guidelines.

      Hope this helps?

      • Josh Day on July 29, 2017 at 8:12 pm

        I am in the same predicament as most of the commenters. I will be making around $70,000 when I graduate my doctorate program and begin working in November. I have a total of $196k in student loan debt. I have no other debt and a credit score of 746. According to some online calculators, my payment on IBR will be roughly $100/month due to family size and retirement savings lowering income. I am interested in a small multi family (2-4 plex) to reduce my portion of the mortgage. How will this impact my IBR? I had thought about using an FHA203K loan to build in some equity, but it sounds like it is best to pursue another type of loan due to 1% of debt being using for FHA. Are there other loans that allow you to roll rehab costs into the loan besides FHA203K loan? Any help would be appreciated. Thanks!

        • Scott Schang on July 29, 2017 at 11:58 pm

          Hey Josh, FHA is not going to allow you to use your IBR payment for your DTI. You’re not going to have as low of a down payment as FHA, but have you looked at conventional? Both Fannie Mae and Freddie Mac allow you to use your IBR payment when calculating your debt to income ratios.

          If you need an introduction to an experienced lender, I can help. Just shoot me an email to scott@findmywayhome.com let me know what State you’re in.

          Hope this helps?

  3. Rachel on July 15, 2017 at 3:24 pm

    Hi! I am in the same predicament as most of the commenters. I make $93500. I have a total of $193k in grade school debt. Some additional credit card debt and a credit score of 725. I pay $864/ month for consoldated loan and 107 for a private loan.I am possibility interested in a 2 family to reduce my portion of the mortgage. How will this impact my ibr? Is better to look at a single family loan. I had thought about an FHA loan but it sounds like it is best to pursue another type of loan. Any help would be appreciated. Thanks

    • Scott Schang on July 15, 2017 at 3:30 pm

      Hi Rachel,
      You would not be able to use an IBR payment when calculating your debt to income ratio for an FHA loan. Freddie Mac Home Possible will allow you to buy a 2 unit property using your IBR payment.

      The hard part of this is going to be finding a lender that has experience with these guidelines, and that’s where I can help 🙂

      If you would like an introduction to someone that can help, shoot me an email to scott@findmywayhome.com and let me know what State you’re buying in.

      Hope this helps?

  4. Elisha on July 13, 2017 at 6:32 pm

    I’m going to hop on this awful IBR bandwagon… I have about 68k in loans, I’m approved for PSLF and my payment on the IBR is $0. Every option I’ve tried here in Idaho has or me over the DTI limits. So do I wait out the 3 years until my loans are forgiven? It seems like there should be consideration for PSLF program during underwriting?!?!?!

    • Scott Schang on July 13, 2017 at 6:56 pm

      Hi Elisha,

      The lender you’ve spoken to may not understand the guidelines. Using a conventional loan, you can use your $0 on your IBR loan. As long as the loans are not deferment or forbearance, you can use the $0 payment.

      I have your email address, I will introduce you to a lender friend of mine in ID that has experience with this!

      Hope this helps?

  5. Patricia on July 11, 2017 at 10:19 pm

    I can’t find any information out there so far about GRADUATED repayment. My current payment is $256 for 2 years; then it jumps up and has a new stable payment for two years, then increases agin, etc. Can I use $256 for FHA even though it will eventually increase- it still fully amortizes over the 10years.

    • Scott Schang on July 12, 2017 at 11:49 am

      Hi Patricia,

      FHA is going to require that your payment be fully amortized to pay off at the end of a pre-determined term. It would make sense that using the payment that eventually pays off the loan at the end of the term, would be a way to approach this. Do you know what the final graduated payment is?

      The next challenge is going to be to find a FHA underwriter that agrees with me on that. I have not personally run into this specific situation, but I would definitely take this to an underwriter and fight for it.

      The other option would be Conventional financing. Is there any reason why you cannot use a Fannie Mae or Freddie Mac conventional loan? Both of these underwriting guidelines allow you to use the reported payment when calculating your debt to income ratio.

      If you would like an introduction to a lender that I know and trust, and has experience with student loans, shoot me an email to scott@findmywayhome.com with the State you’re buying in, and let’s see if we can get you some solid answers.

      Hope this helps?

      • Patricia on July 12, 2017 at 3:21 pm

        It would eventually be more than the 1%. My underwriter wants to use the 1% rule for approx $455, in the last two years of repayment i think it is around $700 each month. I am looking for a loophole- obviously, because I think the way the rule is worded and the way my verification is also worded I should be able to use the $256 payment. The rule says the actual payment if it full amortizes- which it does, and my verification letter says term: 119 months, based on the current principal balance and interest rate, your accounts total monthly payment amount will be 255.56. Obviously if I apply for a home loan in two years the amount would be different. I’m just wondering who has the final say? Will FHA deny the loan? will the underwriter get in trouble when my payment increases? No where on my verification letter does it say it is a graduated repayment. It is a grey area in my opinion- thanks for being a sounding board and I appreciate any further input you might have.

        • Scott Schang on July 12, 2017 at 4:25 pm

          I spoke to an underwriter this morning about this. They stated that FHA will not allow a graduated payment, and that the 1% will be required.

          Your question about who has the final say? At the end of the day, it’s HUD/FHA. If HUD does not insure the loan, the lender who originated the loan is on the hook for an uninsured FHA loan. To a lender, that means you’ve got this loan on the books that you cannot sell, so that you can get your money back to lend to another borrower. It’s called an unsellable loan, or a buyback if the lender if forced to buy the loan back sometime in the future.

          Different lenders have different levels of tolerance for risk. Some lenders have their underwriters taking a very conservative stance, other lenders could take a less aggressive approach. My experience has always been that the rule is that an underwriter is going to take the absolutely most conservative approach to interpreting the guidelines.

          It is my opinion that if you are using FHA financing, your debt to income ratios will be calculated using 1% of the balance as a payment.

  6. Elle on July 11, 2017 at 4:41 pm

    Hi, my husband owes 55k in student loans. He has decent credit. And he recently got a job with our county so he’s on the public service loan forgiveness program and since May qualified for a $0 monthly payment since he makes $43,200 and we are a family of 5. As of February when we spoke with a lender, we didn’t qualify because the debt to income ratio and he wasn’t on the program yet. Just wondering if you could tell me how being at $0 now would change from when he was ok deferment. I have bad credit due to hospital bills unfortunately. But like someone else who said who also happens to be frol Wisconsin, we’ve thought about divorcing so I don’t have to be included in the usda since I owe like $9k in hospital bills.

    • Scott Schang on July 11, 2017 at 4:48 pm

      Hi Elle,

      As long as the student loan is not currently deferred, you can use conventional financing with a little as 3% down payment. Conventional financing will allow you to use a $0 IBR payment when qualifying.

      USDA is going to require you to use 1% of the loan balance when calculating your debt to income ratios. That basically adds a $55 debt to your liabilities for the purposes of qualifying.

      Divorcing should not be an option, and would not be an issue with a Conventional loan. If you medical bills are in collection status, most automated underwriting systems will not require that medical collections be paid.

      With a Conventional loan, you do not have to be on the loan, and your credit score will not hurt your ability to qualify.

      Hope this helps?

      P.S. I have a fantastic lender that has a lot of experience with IBR payments. I will make an introduction by email.

      • Jackie Ponich on July 18, 2017 at 7:01 pm

        “I have a fantastic lender (in Wisconsin) that has a lot of experience with IBR payments. I will make an introduction by email.” You wrote this to a person from Wisconsin. I am on the 6th or 7th lender/loan rep who insists that I have to calculate the 1% into my total debt. I pay zero on the IDR repayment plan. Is that the same as IBR? I would love your person’s name also so I can get on with my life and buy a residence instead of spending my days researching, emailing and worrying no one will give me the loan. Thank you!!

        • Scott Schang on July 19, 2017 at 9:33 am

          Hi Jackie,

          Yes, I have a great lender in WI that can help. They can also help with your other question regarding automated underwriting decisions.

          I will send an introduction by email now. You should see their contact info in the next 10 minutes.

          Hope this helps

    • Scott Schang on July 11, 2017 at 5:06 pm

      I figured that out and fixed it 🙂

  7. Nicole on July 7, 2017 at 2:51 pm

    HI I just had my lender tell me tat I can not get approved for an FHA loan because my student loans are 75,000 and with the 1% it will put me over the debt/income ratio limit. I can not get a traditional loan because I am only 2 years out of bankruptcy. Is there any way around this. My student loans are currently in IBR status with $13 a month payments.

    • Josh Lewis on July 7, 2017 at 3:33 pm

      Hi Nicole,
      FHA currently requires the use of 1% of the student loan balances unless a fully amortizing payment can be demonstrated. With IBR, you won’t be able to do that unless your lender can provide you documentation of what the actual amortizing payment would be. In our experience, the only way we’ve seen that happen is when the borrower switches from IBR to a traditional repayment plan.

      Depending on your exact qualifications there are a few options that allow the IBR payment for qualifying, including Fannie Mae and Freddie Mac which both have 3% down options. Where are you located? If you’d like, we can connect you with an expert lender in your area who is well versed in IBR guidelines.

  8. Tim on July 5, 2017 at 4:49 am

    Thanks for the information. This is the most informative piece I have found. So, I have $56,000 in student loan debt and my IBR is $70. My other revolving debt totals $530 (car payment, credit cards). My income is only $39,000 as I work in a public service field. I am making qualified payment LZ towards my loan forgiveness after 10 years. I was interested in the FHA and USDA loans, but not sure if my debt to income ratio would put me over the top at this point!? Can you please help?

    • Scott Schang on July 5, 2017 at 10:08 am

      Hi Tim,

      Both USDA and FHA are going to require that you have an amortized student loan payment. Since your payment is IBR currently, you would either need adjust your repayment plan to pay off your loan at the end of the term, or use 1% of the balance as a qualifying payment.

      Your best chance at qualifying is to use a conventional loan. Conventional financing will allow as low as a 3% to 5% down payment, and will let you use your $70 IBR payment when qualifying.

      If you would like, I can introduce you to a lender that has experience with these guidelines? If you shoot me an email to scott@findmywayhome.com, and let me know what State you’re buying in, I can make that introduction later today.

      Hope this helps?

  9. Nita on June 30, 2017 at 5:49 am

    I have multiple student loans. Some of my loans are in repayment and i am enrolled in the Public Service loan forgiveness and i am on an income based repayment plan. I am in still in school and I have some loans in deferment. I was able to get a letter from my lender stating what my income based payment will be for those loans. Is this acceptable? Or will the lender still use the 1% of the loan for the monthly payment?

    • Scott Schang on June 30, 2017 at 9:17 am

      Hi Nita,

      Really good question! My experience is that the loan cannot be deferred, or the 1% will be used. I can see an underwriter potentially using that statement, but I think there’s a better way to protect yourself from surprises here.

      If you are currently looking to buy a home, I would start making the IBR payment on those loans. Once you buy the home, you can put those loans back into a deferred status.

      If you would like, shoot me an email to scott@findmywayhome.com, and let me know what State you’re buying in, and I can introduce you to a lender friend of mine that has experience with these guidelines.

      Hope this helps?

  10. Jett on June 22, 2017 at 8:39 am

    This Ibr rule seems so unfair. I work in public service income is minimal and qualify for IBR with zero monthly payment. I have $44k student loan debt and using the 1% rule would put my monthly calculations upward of $400/mth for DTI, but a person who maybe has an IBR payment of $1 obligation would only have that $1/mth factored in for dti? It just doesn’t make sense to me! Using this formula would drastically lessen the loan amount that I qualify for as opposed to the person who’s $1 is factored.

    • Scott Schang on June 22, 2017 at 9:49 am

      Hi Jett,

      As long as your student loans are in repayment, even with a $0 payment, you can qualify for a home loan now. You have to use a Conventional loan, but it’s very possible, we do these all the time.

      If you would like an introduction to someone that has experience with these guidelines, shoot me an email to scott@findmywayhome.com and let me know what State you’re trying to buy in.

      Hope this helps?

  11. Renee lefthand on June 20, 2017 at 4:18 pm

    hi so if someone uses the income based program ….for 48000….it states you could being paying alot more ….is it just going to grow and grow into 100000 dollars and more then ? while I sit and pay hardly anything because I do not make much at all but like to get a bank loan some day like for car or home ? plus I go crazy knowing I m paying let’s just say 100 month and my loan is growing and growing into doubke the amount or more …yikes please help thank u

    • Scott Schang on June 20, 2017 at 5:19 pm

      Hi Renee,

      Yes, that’s the way that it works. An IBR payment is covering a portion of the interest due on your loan. Each month, the unpaid interest is being added to the principal balance that you owe.

      Many that use IBR payments work in the public sector as a government worker, teach, police, fire and are eligible to have the loans forgiven in 10 years. If you do not work in the public sector, and some point, you’re going to have to start paying down your student loan.

      Now, let’s look at this another way. You can buy a home using your IBR payment. Over the years, you will earn equity in your home. Down the road, you can refinance your home to pay off your student loans.

      You’re right about one thing though, it’s going to have to be dealt with at some time.

      Hope this helps?

  12. Clare Kramee on June 19, 2017 at 9:33 am

    I have Ann ibr and a boyfriend who’s a veteran. It’s very complicated can you please recommend a good loan officer in my area. I live in Orlando Florida 32832

    • Scott Schang on June 19, 2017 at 12:28 pm

      Yes Clare,

      I’ve will make an introduction by email.

  13. Kate on June 13, 2017 at 1:32 pm

    I am looking for a mortgage lender in Wisconsin that is highly skilled in dealing with student loans. My husband and I have a combination 200,000 in student loans. His payment is zero, and my IBR is $560 a month. We have no other debt and we live frugally. Our income is about $115,000 a year. My plan was to purchase a home on my income ($90,000) and debt only, but we live in a community property state and they said they need to look at my husbands monthly debts (which is zero on IBR). We’ve even considered getting divorced until the home purchase is complete so that we don’t have to factor in his student loan debt. We want to purchase something under $200,000

    • Scott Schang on June 13, 2017 at 1:44 pm

      Hi Kate,

      Oh my gosh…you should not have to get divorced to do this! I am going to send you an introduction to a lender friend of mine that can help. Being in a community property State has nothing to do with using your husbands student loan debt. First of all, your lender is trying to get you approved for a FHA loan. That’s the reason for having to use your husband’s debt. Using a Fannie Mae conventional loan, not only do you not have to count your husband’s debt, but you can also use his $0 IBR payment when qualifying.

      You’ll see the introduction in a couple of minutes, hope this helps?

  14. Antionette on June 5, 2017 at 12:16 pm

    I filed chapter 7 bankruptcy over 2 years ago and I have 700 middle score, my IBR payment is $102.00 a month but I have over 150k in student loans. my dti is 58% Is it a program that could help me with a mortgage? or should just wait after the 4 year waiting period

    • Scott Schang on June 5, 2017 at 12:24 pm

      Hi Antionette,

      At this time, only conventional underwriting guidelines will allow you to use an IBR payment when qualifying. If you DTI is 58% using your IBR payment, you’re going to need to do a little work on get your debts down, or use a co-signer to help income qualify.

      FHA will allow you to buy with a 56.99% back end DTI, but will not let you use your IBR payment.

      Conventional guidelines are going to require a 4 year waiting period following the discharge of a chapter 7 bankruptcy.

      Hope this helps?

  15. Raven on June 1, 2017 at 7:12 pm

    I looking for someone to help me navigate getting a loan in the Austin Texas area. I have an IBR and am looking to buy in next year. I have my masters and racked up 120,000 in student loans. My income is 70,00 from employment, not sure if I can use child support as well… if so 80,000. My IBR is zero at this time.

    • Scott Schang on June 1, 2017 at 8:28 pm

      Hi Raven,

      I’ve made an introduction in a separate email. You would be eligible for conventional financing using a $0 payment as long as the loans are not deferred or in forbearance.

      You can use child support is you can document a history of receiving it, and show that it will continue for 3 years.

      Hope this helps?

  16. KWms on June 1, 2017 at 12:02 pm

    Hello. I am like everyone caught in this student loan dilemma. My husband and I are looking for a FHA construction loan but current middle score is 624/626 according to the last mortgage company. After adding in the 1% student loan our DTI went from 36 to 74%. I’ve heard that they are tweaking the requirements for the student loan. Have you heard anything? Will there be changes soon? Should we wait it out? I’m in Mississippi and would love to work with you cause you seems so knowledgeable. But if not, please send a very good referral.

    • KWms on June 1, 2017 at 12:04 pm

      Also our student loan combined is 260k and they are deferred. Should we get on an IBR plan?

      • Scott Schang on June 1, 2017 at 12:11 pm

        As long as your loans are deferred, your options are limited to the 1%, or you can use the Fannie Mae payment table to establish an amortized payment.

        If you get on an IBR plan, you can use that payment to qualify for a conventional loan. Your debt to income ratio would need to be under 50%, and you would most likely need a minimum of 5% down payment. There are conventional programs that allow for 3% down with income limits.

        I will make an introduction to a lender friend of mine that can help in Mississippi with experience with these guidelines. He can help walk you through all of these options.

        Hope this helps?

  17. Ms Taylor on May 31, 2017 at 3:46 pm

    Looking for a IBR payment lender for a educator couple in Georgia. Do you have any recommendations? We have been searching for almost a year

    • Scott Schang on May 31, 2017 at 5:01 pm

      Hi Ms Taylor,

      Yes, I have a great lender that can help in Georgia and has a lot of experience with the IBR payment loan guidelines.

      I will send an introduction by email.

      Hope this helps?

      • T. Bell on June 2, 2017 at 12:21 am

        Could you please refer me lender in the Atlanta GA area regarding the IBR also

        • Scott Schang on June 2, 2017 at 8:34 am

          Yes, I have a very experienced lender friend that can help in GA.

          Would you mind sending me an email to scott@findmywayhome.com – please include your name and contact information

          Hope this helps?

  18. Hannah on May 30, 2017 at 2:37 pm

    Hi Josh!
    Thanks for breaking this down in an easy to understand article.. I heard a rumor that FHA guideline changes are coming through soon that would make it easier for those us on a $0 IBR to qualify with FHA. Can you substantiate that?

    • Scott Schang on June 1, 2017 at 10:20 am

      Hi Hannah,

      Josh is out of town right now, so I thought I would jump in here. We have not heard this rumor, but it would make sense that HUD would follow Fannie and Freddie’s lead and allow for IBR payments to be used.

      If FHA does follow suit, we will definitely write about it here!

  19. H. Cleon Smith on May 29, 2017 at 7:09 am

    Josh,
    Thank you for posting this blog. Im retired and on IBR for $44000. I borrowed for my two sons education. My repayment amount is $0 per month. My wife and I both are receiving social security and Im running into a brick wall on refinancing my home as no lenders want to deal with me. I have no other debts other than my current mortgage payment.
    Can you refer me to a lender who could be of help. I have a credit score in the 800 range and about 60,000 in savings and between my wife and my self we have 100,000 in combined IRAs. I live in Indiana.

    • Josh Lewis on May 30, 2017 at 10:56 am

      Hi Cleon,
      As long as you can qualify under Fannie Mae or Freddie Mac guidelines, and you can document the $0 IBR payment, you will be fine. This is a newer development but Fannie Mae even issued a clarification that they will use a $0 IBR payment so long as the loan servicer documents that the loan is in IBR repayment with a zero payment. We have an excellent lender who can assist in Indiana. Scott will reach out shortly with an email introduction. Good luck!

  20. Dan in Kansas on May 25, 2017 at 9:27 pm

    Hi Josh,

    My wife and I are long-time home owners (17 years). We find ourselves in need of refinancing to replace the siding, windows, and gutters, as well as a little HVAC work. We both have doctoral degrees in a major that is not known for high incomes, and are both seeing our student loans increase yearly because of our IBR’s. My wife fortunately has a public university job, and is about half way through her PSLF program. The problem we are experiencing is with the underwriter who wants the fully amortized documentation. There is no way my wife’s tenured position will ever pay enough that we will ever be fortunate enough to leave the IBR program before her 120 payments are completed. What can we do? We have already paid for the appraisal, and perhaps more towards refinancing to one of the major loan companies who holds our mortgage. What do we do?

    • Scott Schang on May 25, 2017 at 10:45 pm

      Hi Dan,

      Josh is out of town today, so I thought I would jump in here and help you out, Josh and I work together.

      If your student loans are in deferment or forbearance, you need to either use an amortized payment, or 1% of the balance of the loan as a qualifying payment when calculating your debt to income ratios.

      If your student loans are not deferred, and you are making an income based payment, you can use that payment when qualifying. You would need to use a Fannie Mae or Freddie Mac conventional loan for your refinance.

      If you want to send me an email to scott@findmywayhome.com, I can introduce you to a lender that can help in Kansas and has experience with using an IBR payment to qualify.

      Hope this helps?

  21. Patty Pritchett on May 24, 2017 at 2:53 am

    Hi, I have high student loan dept and just made my first payment under IBR. I want to buy a house under USDA but they said the 1% requirement makes that impossible. Your article says they WILL consider the IBR. I dont understand why my lender doesnt know this. Can you help?

    • Scott Schang on May 24, 2017 at 7:49 am

      Hi Patty,

      Unfortunately, USDA and FHA are still requiring that your student loan payment be fully amortized to pay off at the end of a set term.

      Fannie Mae and Freddie Mac have changed their guidelines to allow you to use an income based payment as long as the loans are not deferred or in forbearance.

      Fannie Mae and Freddie Mac both have options available that only requires a 3% down payment.

      P.S. I also received your request for an introduction to a lender that has experience with these guidelines. I’ve made that introduction in a separate email.

      Hope this helps?

      • Patricia Pritchett on May 24, 2017 at 8:36 pm

        Hi Scott. Thank you so much. I have not yet recieved your email. Thank you!

        • Scott Schang on May 25, 2017 at 8:45 am

          Check your spam or junk mail Patty, sometimes my emails get filtered 🙁

      • Crystal Jones on May 31, 2017 at 7:00 pm

        Hi Scott, I read your response to Patty. Her situation is just like mine. My lender keeps saying there is nothing they could do. My first payment is due in July, and per my lender unless it shows up in my credit report they have to take 1% of my student loans. Could you refer me to an agent that deals with Fannie Mae or Freddie Mac? Thank you so much

        • Scott Schang on May 31, 2017 at 7:46 pm

          Hi Crystal, if you have a payment due in July, you can prove with a statement from the lender stating what your payment will be.

          Yes, I have experienced loan officer friends all over the Country.

          Send me an email to scott@findmywayhome.com with your contact details and what State you’re trying to buy in.

          I’ll introduce you to someone that has experience with these guidelines.

          Hope this helps?

  22. Melande Pierre on May 22, 2017 at 12:35 pm

    Hi, i am currently working with a mortgage company and has be pre-approval but now that my student loan is being looked at. Is there any lender in Miami, fl i can work with that deals with IBR plans? That-s if they do not approved me. Thank you!

    • Scott Schang on May 22, 2017 at 1:31 pm

      Yes, I can introduce you to someone that has experience with IBR plans. Just shoot me an email with your contact information if you need an introduction.

      My email is scott@findmywayhome.com

  23. Jeff on May 22, 2017 at 11:35 am

    Hi,
    Can you recommend a lender in Colorado who is familiar with IBR plans?
    Thank you!

    • Scott Schang on May 22, 2017 at 12:02 pm

      Hi Jeff, yes, I can. Will send an email introduction now!

  24. Lea on May 18, 2017 at 2:35 pm

    Hello,
    I’m looking to get some advice and hopefully some good news. So here is my situation. I went through a lender here in town (I’m in Wisconsin) and tried to apply for a USDA loan. However, she said that my DTI ratio is way too high because of my student loans. I have student loans totaling $72,000. I am on an IBR plan and pay $37/month. All 3 of my credit scores are above 620, so I’m fine there. And the student loans are really my only debt. I only make about $27,000/year. I didn’t realize that USDA and FHA loans will only do the 1% of the total balance when calculating DTI ratio, instead of what you’re actually paying. The lender said, because of this, I have no options other than to raise my income or lower my DTI ratio. Neither of those are going to happen anytime soon, so am I doomed? Will I not be able to own a home until I’m like 65 lol? Help!
    Thank you! 

    • Scott Schang on May 18, 2017 at 3:59 pm

      Hi Lea,

      You do not have to wait until you’re 65! Conventional financing will allow you to use your IBR payment, and will allow as little as 3% down payment.

      I’m surprised your lender didn’t mention this.

      If you would like an introduction to a lender that has experience with these guidelines, shoot me an email to scott@findmywayhome.com and I can introduce you to a lender friend of mine that is licensed in WI.

      Hope this helps?

      • Callie on May 26, 2017 at 2:21 pm

        I am having the same issue in Wisconsin. I have excellent credit, but a fairly low income and high student loan debt (which I pay via IBR). Do you know of anyone in the Milwaukee, WI area who could help with this? My IBR is around $140/month, but my 1% calculation is almost $500.

        • Scott Schang on May 26, 2017 at 10:32 pm

          Hi Callie,

          Yes, I have a lender friend that is licensed in WI that has experience with these guidelines. I will send an introduction by email.

  25. Cheryl on May 18, 2017 at 10:40 am

    Thank you for article. I’m in the same boat as everyone else. My IBR payment is $98/month plus I have private loans with a co-signer that are $595/month. Everything is up to date. No collections, no late pays on my credit. No car payment and I will have all of my cc debt paid before applying for a mortgage. My score is just under 700 right now and my salary is right around $50,000. I currently own a home and will have more than enough equity when I sell to put 20% down on the new home. With all of this info, do you think I will be able to get a loan using my IBR in Illinois?

    • Scott Schang on May 18, 2017 at 10:43 am

      Hi Cheryl,

      Yes, you could use a conventional loan with your IBR payment. I have a really good lender friend in IL that has a lot of experience with these guidelines.

      When you’re ready, shoot me an email to scott@findmywayhome.com and I’ll make an introduction.

      Hope this helps?

  26. Dawntisha on May 18, 2017 at 10:05 am

    Hi, I’m so confused! I don’t understand the amortized payment. I am currently on an IBR payment plan and the student loan forgiveness program (as I work for the state gov’t). My payment if using the 1% is around $700, though with the IBR, my payments are around $250. How do I get the payment to be on my credit report or will they use my IBR payment?

    • Scott Schang on May 18, 2017 at 10:12 am

      Hi Dawntisha,

      It sounds like you may be speaking to a lender that is not familiar with the guidelines. If you are applying for a FHA mortgage, you have to use an amortized payment, or 1% of the balance. However, you can use a conventional loan and use your IBR payment.

      If you would like, shoot me an email to scott@findmywayhome.com and let me know what State you’re in. I can introduce you to a lender friend of mine that has experience with these guidelines.

      Hope this helps?

  27. Dawn on May 17, 2017 at 7:26 pm

    Hello! Thank you so much for this great article. It’s so informative. My husband and I are both on IBR repayment plans and are both eligible for public service loan forgiveness. I’m looking for a lender with expertise in handling mortgages for these types of cases in New Jersey. Any feedback or recommendations would be awesome!

    • Scott Schang on May 17, 2017 at 7:47 pm

      Hi Dawn,

      I have an amazing lender friend in NJ that has a lot of experience with these guidelines. I am happy to make an introduction.

      Keep an eye out for an email introducing you to Tony.

      Hope this helps?

      • Jen on May 24, 2017 at 1:54 pm

        Do you know anyone in NJ who can help me with a USDA loan? My student loan that is Income Based is causing my DTI ratio to be too high and a mortgage out of my reach even though I make plenty of income a month.

        • Scott Schang on May 24, 2017 at 2:24 pm

          Hi Jen,

          Yes, I have a great lender in NJ. I’ve sent you a separate email with an introduction. Unfortunately, you are not going to be able to use USDA with an IBR payment. Your only options for using your IBR payment is going to be a Conventional loan with 3% to 5% down payment.

  28. Matt on May 15, 2017 at 1:06 pm

    Same situation here. I’m tired of dealing with lenders unfamiliar with these updated guidelines. Do you know anyone in AZ that I could talk to?

    • Scott Schang on May 15, 2017 at 1:58 pm

      Hey Matt, I’ll shoot you an email introduction to someone that has experience with these guidelines.

  29. Kellee on May 14, 2017 at 3:19 pm

    Wow, I don’t think the lender we’ve been dealing with is familiar with this update! She calculated the standard 1% which puts our DTI high. My husband’s loans are in forebearance until he starts back up in the fall and then in deferment through his Ph.D. program. He has about 70k worth of debt and we have my dad as a co-borrower. Can we still use the Fannie Mae updated plan with a co-borrower (as long as our blended debt/income qualifies?). Also, might you know of a way or a lender that’ll include university stipend contract earnings from a fellowship for income?

    • Scott Schang on May 14, 2017 at 4:27 pm

      Hi Kellee,

      As long as your husband’s loans are in forbearance or deferment, you will be required to us a fully amortized payment calculation or 1% of the loan amount when calculating your debt to income ratio. If you are unable to purchase a home 1% of the calculation, maybe you can look at applying for an income based repayment plan that would allow you to use conventional financing to qualify.

      As for the stipend, you could get a second opinion. Income calculation is pretty well defined depending on the type of financing (underwriting guidelines) you are using.

      You would have to show that the income is customary for your employment, and that it is likely to continue. Even then, you would have to average the income over the past 2 years to determine the monthly contribution to your debt to income ratio calculation.

      I can definitely introduce you to a lender that understand all of these guidelines, and can help explore these options?

      If you would like an introduction, shoot me an email to scott@findmywayhome.com with the best contact information and the State that you’re buying in. I will be happy to connect you.

      Hope this helps?

  30. Amy on May 8, 2017 at 9:06 am

    Can I just say THANK YOU for keeping this information updated! It is so helpful!

    • Scott Schang on May 9, 2017 at 9:14 am

      Thank you Amy 🙂 This is such an important guideline, and the misinformation around this topic is staggering! We will stay on top of it.

  31. Sharon on May 3, 2017 at 4:20 pm

    Hi, I am a teacher and I am on an ibr plan. My loan is under the USDA and I’m now being told they have to count 1% of my loan balance, which now takes me out of the debt to income ratio. If I’m going to have a public service forgiveness in a few years, how can I get around that 1% rule? It doesn’t make sense because that rule applies to the long term.

    • Scott Schang on May 3, 2017 at 4:26 pm

      Hi Sharon,

      Unfortunately, as of today, USDA requires a fully amortized payment that will pay off at the end of the loan term to be used when calculating your debt to income ratios.

      Your only option for using your IBR payment is a conventional Fannie Mae or Freddie Mac loan.

      Both Fannie Mae and Freddie Mac will allow as little as a 3% down payment.

      Hope this helps?

  32. Denise on April 30, 2017 at 2:48 am

    I am currently a teacher in Charleston, SC. I am interested in building a home. I told my builder I have been working on my credit and have improved my score drastically. She told me because it takes about 7 to 12 months to build I could get pre-approved with their preferred lender and work on my credit because the lender has an awesome program that they use and has been really successful within 3/6 month improvement rate. (I only needed to increase about 50/75 points). After applying and having the lender look over my credit (which the lender said was not the major issue), I was told because of student loan balance is high (6 figures because I have a doctorate degree) they could not help me without a cosigner for added income. My parents said don’t use that lender because i’m sure there are lenders that can help you. My realtor friend said they are waiting on approval for a program where they can use IBR but it hasn’t been approved yet. My realtor friend also said to consolidate my loans to help offset the 1%. My loans will also be forgiven in 10 years. I am currently in deferment because this is my last semester of school so I can’t consolidate until I am done. Can you point in the direction of a lender in Charleston, SC that can help? I really wanted to use the builder’s lender because they give you money at closing but my options are definitely open.

    • Scott Schang on April 30, 2017 at 6:51 pm

      As long as your student loans are not in deferment, go back to them and let them know that Fannie Mae updated their guidelines last week, and as long as your IBR payment is reported on your credit report, you can use that payment for calculating your debt to income ratios.

      Hope this helps!

  33. Lashae on April 27, 2017 at 2:30 pm

    Hello. I am interested in purchasing new construction in a subdivision for $230,000. I make $56,000 annual income. My debt includes $380 auto (which I have the ability to put down $4000 to pay off the balance to get me down to 10 months left of pays, not to count this in my debt/income.
    I have $80,000 in student loans (currently in deferred status until Aug 2019) If out of deferment, I could pay $280 a month on the IBR plan. My credit is not that good. 635 middle credit score. 3 collections (1 doctor bill, and two old credit cards) along with six 30 day late payments in 2015. My credit took a hit after I had a baby in 2014 and I took off for a few months with no pay as well as go thought a year custody battle that cost me pretty much my life saving for attorney/court fees and caused me to get behind on my bills. I do receive about an additional $15K a year in child support but I wish not to include in my loan application. Are there any options for a home loan? Should I take my loans out of deferment and start paying the IBR plan amount? Will this help, if I paid down my auto loan to less than 10 months left. Also, how to do I get the student loans to report the IBR amount verses $0 or the higher normal amount? The home I am looking to purchase is in a rural area so I would qualify for the USDA. I also have never purchased a home before and would qualify for my state’s down payment assistance programs. I also have about 3% for a down payment if need be from family as a gift.
    Please help!

    • Scott Schang on April 27, 2017 at 4:20 pm

      Hi Lashae,

      Hi Kim,

      It sounds like you may be able to qualify, but it’s difficult to say without getting more information.

      Your student loan cannot be in deferment for either FHA or USDA loans, and you would not be able to use the IBR payment for either of these loan programs either.

      Your only option would be to use a Conventional loan, with your student loan on an IBR payment.

      What State are you trying to buy in?

      I can introduce you to a lender that is licensed in your State that can help.

  34. Ty on April 24, 2017 at 3:55 pm

    Hi,
    Thank you for all the info! I want to purchase a home at the end of this year. My situation is like everyone else. I currently have a IBR student loan with a $230 payment, my balance with the capitalize interest will be approx. $74K. My situation is complicated. I did file BK in 2015, my discharge paper was dated November 15th. Is there a home loan that I may qualify for if I won’t have 20% down? and where my IBR payment of $230.00 that is showing on my credit report will be used instead of the 1% balance rule? From reading the comments, FHA seems out of the picture.
    Thanks

    • Scott Schang on April 24, 2017 at 4:47 pm

      Hi Ty,

      The challenge you’re going to have is the BK. Was there a mortgage included in the BK? If not, Freddie Mac conventional is the only option for using your IBR payment when qualifying for the home loan. Conventional is going to require a 4 year waiting period from the discharge of the BK.

      If there was no mortgage included in the BK, you would be eligible for FHA financing in 2 years from the BK discharge date, but will have to use either a fully amortized payment, or 1% of the loan amount to qualify for the home loan.

      You always have the option of converting your payments to a fully amortized payment until you buy you home? Check with your student loan lender to see if that’s possible, and what the payment might be. Once you know what the amortized payment would be, check with your lender to see if it would work.

      If you do not have a lender that is familiar with these guidelines, shoot me an email to scott@findmywayhome.com and let me know where you’re buying. I can introduce you to someone with experience.

      Hope this helps?

  35. Jessie on April 20, 2017 at 3:06 pm

    Hello! My husband and I have a high debt to income ration due to student loans. My husband owes over $53000 and his loans are deferred because he is an active duty marine. In order to get a VA loan the debt to income ratio needs to be about 45% and because they use the standard payment we are at about $65. How do we figure out how much to start paying on his loan to be approved? And how long do we have to be making this payment for the lenders to see that we are on the plan?

    • Scott Schang on April 20, 2017 at 3:10 pm

      Hi Jessie,

      VA is not restricted to a 45% debt to income ratio. The maximum is determined by the automated underwriting system. If you are unable to get an automated underwriting approval for some reason, then your debt to income may be more restrictive.

      VA uses a calculation to determine the payment for qualifying. The calculation is 5% of the loan amount, divided by 12. For your husband’s loan, $220 a month would be used for calculating debt to income.

      If you would like an introduction to a lender that is familiar with VA and student loan guidelines, you can email me at scott@findmywayhome.com and I can connect you with someone that can help.

  36. Shawna on April 17, 2017 at 9:15 pm

    Hi Josh,
    I have a bit of sticky situation 2 weeks before settlement. First, I already own a property that I will be leasing upon settlement of my new construction home. The problem that my banker failed to mention is that FHA will not allow me to use the rental income because my new home is only 55 miles away…So now I’m stuck trying to bring my dti back down 🙁 Second problem, I am also in an IBR and of course they want to use the 1%. The bank advised that I consolidate or get an amortization schedule. Is this a good ideal? How long do you think something like this will take? So the goal is to reduce my student loans to cancel out the mortgage on my first property. Is this do-able in a such a short timeline? How hard is it to get the student loans creditor to do an amortization schedule of the IBR payment??
    Thanks in advance,
    Shawna

    • Josh Lewis on April 18, 2017 at 1:59 pm

      Hi Shawna,
      I’m sorry you got caught by the FHA 100 mile rule for the new home. That was a new change when the updated FHA underwriting manual was released in 2015. Prior to that, there was no such requirement. If a loan officer doesn’t do many FHA loans, it’s easy to miss some of the changes like that one.

      On to your questions. I don’t think a consolidation or amortization will help much OR is necessary. FHA will not work for this you due to the 100 mile rule so you are looking at a conventional loan either way. Fannie Mae is more restrictive so assuming you can get an automated approval through Freddie Mac, you can use your IBR payment. If you go Freddie, you will likely need 5% down as the Home Possible 3% down options don’t allow you to own any other real estate.

      Where are you located? We can introduce you to a lender who is an expert in these circumstances to get you accurate advice on the best way to get you to a successful closing with your IBR loans.

  37. Tina on April 15, 2017 at 11:56 pm

    So if we qualify we should get a jumbo loan?

    • Scott Schang on April 16, 2017 at 7:17 pm

      A Jumbo loan may be a good option, but it’s not always your only option. Jumbo lenders are not going to be as consistent about how they calculate income based repayment. Jumbo interest rates are pretty close to conventional interest rates.

      You may also want to consider a piggyback, first/second combo. If you cannot find Jumbo lender that accepts your income based payment, maybe a Freddie Mac conventional first, and a HELOC or closed end second would work?

      Hope this helps?

  38. Christie on April 12, 2017 at 10:32 pm

    I’m currently on the IBR plan paying $167/month. My outstanding loan balance is 152,000. I was declined because Using the 1% requirement, my debt to income ratio is anout 62%. I was told by the lender that i would need to be on a fixed plan to lower my debt, which will guarantee approval. However, I won’t be able to afford the payments on a fixed plan. I’ve read the articles and comments to get a better understanding of my options. I’m wondering if Fannie Mae loans will be a better fit for me

    • Scott Schang on April 12, 2017 at 10:53 pm

      Hi Christie,

      Fannie Mae and FHA are both going to require that you use a fully amortized payment, or 1% of your balance. Not to worry, there is another option!

      Similar to Fannie Mae, is a conventional loan using Freddie Mac underwriting guidelines. Freddie Mac guidelines allow you to use your IBR payment to qualify.

      Shoot me an email to scott@findmywayhome.com and I can introduce you to a lender in your State that can help.

  39. Jane on April 12, 2017 at 6:27 pm

    Same boat has everyone else 🙂 Do you have a lender in the KCMO that can assist with a buyer with high student loan debt, 26 months post discharged bankruptcy. Thanks!

    • Scott Schang on April 12, 2017 at 6:34 pm

      Hi Jane,

      This is going to be a tough one. Technically, you could qualify for a conventional loan using Freddie Mac guidelines and use your IBR payment. Was there a mortgage included in your bankruptcy?

      If anyone can do this, I have someone that I think can. Keep an eye on your email for an introduction to a lender friend of mine.

      The IBR payment is not the issue here, it’s going to be the bankruptcy that will be the biggest hurdle in your situation.

  40. Moses on April 11, 2017 at 9:41 pm

    My IBR is $62 my loan amount is $170k. I applied for a loan but underwriting declined because it didn’t git thru automatic Freddie Mac under writing. They are saying that amount I’m paying needs to be pay loan within 990 months. And since $62 a month does not pay the loan in those months I don’t qualify. Is this true? Any way around it?Florida

    • Scott Schang on April 12, 2017 at 10:02 am

      Hi Moses,

      It does not sound to me like this was underwritten properly, I have not had this experience. As I mentioned when we spoke over the phone, please send me a copy of the automated underwriting approval so I can review.

      I believe they made a mistake.

  41. Nita on April 11, 2017 at 6:28 pm

    Hello, I live in Lithonia Vs, the suburbs of Atlanta. I have an I BR . How do you qualify for a Freddie Mac conventional loan? Do you have to purchase a home through their program ? Also are there any lenders in the metro Atlanta area or Ga in general that you can refer me to. Any advice is greatly appreciated.

  42. Stephanie on April 8, 2017 at 5:07 pm

    I am in desperate need of some guidance here. My husband and I have loads of student loan debt. He is VA eligible. I am on IBR and he is a current student. There is more to the story. Please help!! Also in Va.

    • Scott Schang on April 8, 2017 at 7:47 pm

      Hi Stephanie,

      You have options here. VA is not as flexible as Freddie Mac Conventional guidelines. I am going to introduce you to a lender friend that has experience with these guidelines and can help in VA. Keep an eye out for an email.

      Hope this helps?

  43. John Jones on April 6, 2017 at 8:12 am

    Hi Scott, I’m in Virginia and trying to buy a home while on IBR. Do you have anybody you can recommend out this way?

    • Scott Schang on April 6, 2017 at 1:29 pm

      Hi John,

      Yes, I have a great lender that has experience with these guidelines. Sending email introduction now!

  44. Vanessa on April 5, 2017 at 1:05 pm

    Sorry meant to include Hi Josh Lewis Scott Schang in the comment below.

  45. Vanessa on April 5, 2017 at 1:01 pm

    Hi Scott,

    I have read your article and everyone’s comments. I am so relieved to see other people are going through the same thing I am. It’s been a nightmare trying to get approved for a mortgage with my high student loan debt. My husband can get approved for a mortgage only if I’m not added to the loan but without adding in my income and having me on the loan it makes his debt to income ratio higher since cars are in both our names and he can only get approved for a small amount that wouldn’t even buy a house in this market. I’m in a similar situation as the teacher below as I’m a Therapist that works in nonprofit and my loans will be forgiven within the next 7 years. I see from your comments my best option is to try to get my payment form $0 to at least $10. Since I’m on the IBR payment plan they calculate the payment so how would I get that adjusted? Also I’m in Tampa, FL do you have a lender you can recommend?

    • Scott Schang on April 5, 2017 at 1:10 pm

      Hi Vanessa 🙂

      If you can get your payment adjusted to be above $0, that would make it a lot easier. In California, I have an investor that will allow a $0 payment, but most other lenders are requiring some payment to show up on the credit or a statement from the lender.

      I have a very experienced lender in FL that I will introduce you to. Keep an eye on your email!

      Hope this helps?

      • Vivian Lindsey on April 19, 2017 at 2:48 pm

        Hi Scott,
        My IBR is $0. My loan officer is saying it can’t be $0 for a FHA loan. I’m in California and seen that you mentioned knowing a lender that will accept $0.. can you let me know. Thanks!

        • Josh Lewis on April 19, 2017 at 2:52 pm

          Hi Vivian,
          With FHA, you will always have to use 1% of the loan balance if your payment is not fully amortizing. Since a $0 payment can’t amortize the loan, you would be forced to qualify with 1% of the balance. The alternative is the Freddie Mac. You may be able to do 3% down with Freddie if it meets certain eligibility requirements. I’ll shoot you an email with my contact info. Call me when you get it, we can help in CA.

  46. Lori on April 3, 2017 at 10:40 am

    I have a friend in Northwest suburbs of Chicago with IBR of zero. Her mortgage broker told her he can’t qualify her for anything. Can you point me to a lender/broker that might be able to help?

    • Scott Schang on April 3, 2017 at 11:07 am

      Hi Lori,

      Shoot me an email to scott@findmywayhome.com with your friend’s contact info. I have a very experienced lender in Chicago. As long as the loan is not deferred, it can be done.

      Worse case scenario, your friend may have to resubmit their paperwork to result in any payment at all…even if it’s $10 a month.

  47. Karen on March 30, 2017 at 12:48 pm

    Hi, this site is a wonderful find. I too am looking for mortgage with an IBR student loan. I live in central California. My SO of 14 years died and we never put my name on the loan or property because of my student loans. I have inherited the house and would like to refinance/purchase? I’m confused about that. I am now the legal owner. Do you know of a lender that can help me? Thank you.

    • Scott Schang on March 30, 2017 at 1:42 pm

      Hi Karen,

      Yes, I have an amazing lender, actually the person that wrote this article, Josh Lewis is in California.

      I will make the introduction by email right now!

  48. Jennifer on March 29, 2017 at 9:14 pm

    Hello, we are searching for a home in Michigan. We are married both with student loans on the ibr payment plan with 0.00 monthly payments that are reported to the credit agency. Our student loan debt is combined at about 80. Is there anyone who can help us?

  49. Mohammed Kamara on March 29, 2017 at 12:44 pm

    I am looking for mortgage with IBR student loan.

    • Scott Schang on March 29, 2017 at 9:28 pm

      Mohammed,

      It was a pleasure speaking with you today. I am confident we will be able to help!

  50. A.B. on March 29, 2017 at 10:56 am

    Hello, I am also looking for lender who is familiar with IBR and can help us get a mortgage using the IRB repayment amount instead of standard repayment. We are in Northeast Indiana.

    • Scott Schang on March 29, 2017 at 10:59 am

      Hi Amelia,

      I have a very experienced lender in IN that can help. Sending an email introduction now.

      Hope this helps?

      • J.M on March 30, 2017 at 7:48 am

        Scott can you send me your information a well.

        • Scott Schang on March 30, 2017 at 11:40 am

          Hi J.M., If you haven’t already emailed me, please do.

          I am a lender in California, and I’m kind of on a one man quest to rid the world of inexperienced and horrible loan officers that don’t take their jobs seriously.

          We are dealing with people’s lives here, and this is important stuff. I created this website 10 years ago to educate and empower consumers so you can quickly identify when you’re working with a lender that doesn’t know what they are talking about.

          It’s a little disheartening how successful this website has been, because it means that there are still a LOT of really bad loan officers in my business.

          Long story….sorry. The result of this quest has been that I have met a handful of really great loan officers around the Country that have experience with these guidelines, and love to help people.

          Anyone that needs help can email me at scott@findmwywayhome.com and I can introduce you to a friend of mine that share my values, and passion for helping people.

          Hope this helps?

      • J.M on March 30, 2017 at 7:49 am

        I am in Indiana

  51. Ryan Morris on March 29, 2017 at 8:46 am

    I am in the same boat as many of the folks here. Can you connect me with a broker/lender in Orange County, Orlando, Florida that will work with me on an IBR program? Thank you.

    • Josh Lewis on March 29, 2017 at 9:47 am

      Hey Ryan,
      Check your inbox for the introduction. We have a great lender in FL who can help you!

  52. Kenney Ashby on March 29, 2017 at 5:02 am

    I’m in a small town in Illinois and can’t seem to do d a mortgage originator who can use ONE as opposed to 1% of student loan debt. Do you have any contacts in Central Illinois? Your help is greatly appreciated appreciated.

    • Scott Schang on March 29, 2017 at 8:35 am

      Hi Kenney,

      Help is on the way! I have a great lender in IL that is very experienced with the guidelines that allow your IBR payment when calculating your debt to income ratios.

      Sending email introduction now, hope this helps?

  53. Janet Flounory on March 28, 2017 at 5:53 am

    HI,
    I am currently on a IBR repayment plan. Will you please connect me to a loan officer that will allow me to use my IBR repayment to qualify for a home loan?

    • Scott Schang on March 28, 2017 at 10:54 am

      Hi Janet,

      Yes, I can absolutely introduce you to someone that has experience using an IBR payment to qualify. What State are you buying in?

  54. Don on March 27, 2017 at 8:17 pm

    I guess I’m in the same boat. Although if I understand Fannie Mae, they don’t have to go by the “greater of”, but can go by the fully amortized payment, which I could still do and keep under 45%DTI. 1% of loan would put me way over. But I can’t find a lender that seems to understand. I’m not sure about Freddie Mac, as I have a bankruptcy (no home) discharged 3.5 years ago. It seems that I have to wait 4 years post discharge for Freddie? Do you know anyone in Indiana that might help me?

    • Don on March 27, 2017 at 8:19 pm

      I should add that I just recently took my loans out of deferment and am in IBR.

      • Scott Schang on March 28, 2017 at 10:21 am

        That’s not an issue. There is no seasoning requirement for how long you’ve been making an IBR payment.

        As long as you can get a statement from the lender, you can use the payment.

  55. Jeffrey on March 27, 2017 at 11:53 am

    Like many on this thread, my DTI is too high when calculating for 1% of my student debt. My loans are in deferment currently though I could change that to a low IBR monthly payment ($10-50). Is Freddie Mae and FHA working with IBR plans? I just talked to my montage broker this morning and was told they are not. I’d like to buy in Kitsap County, WA. Thanks for any advice .

    • Scott Schang on March 27, 2017 at 12:27 pm

      Hi Jeffrey,

      I am going to make an introduction for you to a lender friend of mine in WA that has experience with these guidelines.

      FHA will not allow your IBR payment, but Freddie Mac will as long as your loans are not currently in deferment.

      You will see the introduction shortly, hope this helps?

      • Ryan Morris on March 29, 2017 at 8:44 am

        Sir, if you would please connect me with a lender/broker for Orange County, Florida that I can go to, I would greatly appreciate it. Currently on a IBR program.

  56. Natosha Smith on March 27, 2017 at 10:13 am

    Hi,

    I recently did a prequalification and my car note plus IBR with 0$ monthly payment is preventing me from getting approved. Because of 1% that she had to add to my DTI and my car note being 390 puts me over 40% DTI. Any lenders in Illinois that specializes in this area to work around this.

    • Scott Schang on March 27, 2017 at 10:18 am

      Hi Natosha,

      Yes, there is a way around this. There are not many lenders that will allow a $0 payment. We have had success in the past going back to your lender and resubmitting your documentation to show any payment at all, even if it’s $10 a month.

      Also, you are allowed up to a 45% debt to income ratio, so there should be a little more room in there for you to qualify.

      I have a very experienced lender friend in IL. Give me a couple of minutes and I will make an introduction through email.

  57. Lauren Davis on March 26, 2017 at 11:20 am

    Hello, i too fall in this category. Do you know of any lenders in the central Florida (Lake Mary/Deltona) area that woulr use the IBR payment instead of the debt to crefit ratio?I am having the hardest time sinve everyone wants to use the 1% but that puts me over the threshold for debt to income ratio. Thanks in afvance!

    • Scott Schang on March 26, 2017 at 12:42 pm

      Hi Luaren,

      Yes, I have a great lender with a lot of experience using the IBR payment when qualifying for a home loan. I will make an email introduction now!

      • Gary on April 10, 2017 at 8:33 pm

        What about texas, I have great credit, consolidated my loans to regular180 dollars

        • Scott Schang on April 11, 2017 at 5:05 pm

          Hi Gary, these programs are available anywhere in the United States. The guidelines are dependent on the State that you’re buying in.

  58. Robert Kearly on March 26, 2017 at 10:26 am

    Hello, I am currently in deferment for my student loans. 1% of the value of the student loans is much more than what my IBR payment will be. The 1% will probably make my DTI too high but the IBR payment should not. For a home loan through Freddie Mac could I come out of deferment and set up IBR payments long enough to qualify for a mortgage under the DTI rules and then later decide whether or not to go back into deferment. Any insight you can give is much appreciated. Thanks.

    • Scott Schang on March 26, 2017 at 12:41 pm

      Hi Robert,

      Yes, you’ll need to be out of deferment, and you would be able to use Freddie Mac guidelines, and use your IBR payment when calculating your debt to income ratios.

      What State are you planning on buying in? I would be happy to introduce you to a lender that has experience with these guidelines if you would like?

      • Dan on March 29, 2017 at 1:22 pm

        Scott: I am in Maryland, could you point me to a loan officer knowledgeable about this IBR stuff. The two I am working with are not.

        • Scott Schang on March 29, 2017 at 9:30 pm

          Hi Dan,

          I’ve send an introduction by email. It is unfortunate that loan officers do not know how to read guidelines.

  59. Samuel on March 25, 2017 at 9:53 pm

    Correction: Rock Hill, SC or Charlotte, NC

  60. Samuel on March 25, 2017 at 9:52 pm

    Omg..I just experienced this last week and had no idea so many were in the situation until I started doing research on the IBR. Do you have a contact in Rochester Hill, SC or Charlotte, NC to can connect me with?

    • Scott Schang on March 25, 2017 at 10:08 pm

      Hi Samuel, Yes! I have some great lender friends in those States that have experience with these guidelines. Sending email now.

  61. Susan Ball on March 23, 2017 at 8:33 am

    My lender said that currently Student with IBR payments are currently in the “Closed” status. This keeps changing and is currently on Trumps “to-do” list to switch back to allowing the IBR payment that shows on your credit rather than the 1%. But I see you’re telling people they can do that now. I’m currently finishing my construction loan. My lender assured me that when construction finished that I could roll it into a Conventional loan and take my Step-father off of the loan as a co-signer. I have great credit and a steady job but my loans are killing me. Now I’m stuck when I’m done building rolling into a 7/1 arm loan keeping my step-dad on it until Trump gets the Bill to change, AGAIN!

    • Scott Schang on March 23, 2017 at 9:51 am

      Hi Susan,

      Wow. I’m almost speechless. It is shocking to me that a lender would just make something up like that. There is absolutely no truth to that whatsoever, and I truly wish that there were consequences for people that would say something so ignorant. Could you imagine if your Doctor was that careless in how they diagnose a health concern? This is a financial concern, so for me, it’s almost as serious.

      Anyhow, I digress…still shocked…but back on track. As long as your student loan is not currently in a deferred status, your IBR payment can be used.

      Shoot me an email to scott@findmywayhome.com, let me know what State you’re in, and I will introduce you to a lender that is an actual experienced professional and does not make stuff up to cover their own ignorance.

      Hope this helps?

  62. A. Scott on March 22, 2017 at 4:53 am

    It looks like I am in the same boat as all! Do you have any contacts for a lender of broker in Atlanta, GA?

    • Scott Schang on March 22, 2017 at 8:51 am

      Yes I do, I also received your question through the chat box and introduced you to a very experienced lender that can help!

      • Gary on March 23, 2017 at 7:11 pm

        Hi Scott,

        I can provide you more accurate info in a private email but here is my situation to give you an idea.

        I am a public school teacher in Illinois since 2009 and I love my job. I am also a single father. I have six figures in student loans. I’m on IBR now but I am going to be enrolling in the Federal Student Loan Forgiveness offered through the National Educators Association. In 6 six years a portion of my loans will be forgiven tax-free. And after 10 years all of them will be forgiven tax-free.

        A lender turned me down because I am not making at least $3000 in monthly payments on my student loans.

        Isn’t there a way to take into consideration my monthly IBR payments and the fact that my loans are going to be forgiven 6 and 10 years from now?

        I’m not looking for a huge house or a $200,000 home. There are actually a couple HUD homes hear that with a little work would be beautiful. There have also been move in ready homes in my area listed for $125000 or less.

        Is it impossible for me to get a mortgage or home loan now? Or am I going to have to wait 6 or 10 years?

        I look forward to talking with you, please feel free to contact me via email.

        Thank you, G.

        • Josh Lewis on March 23, 2017 at 7:43 pm

          Hey Gary,
          You definitely have the option of going the Freddie Mac route with programs that start with as little as 3% down. We have an expert loan officer in Illinois who can help. Shoot me or Scott an email at josh@findmywayhome.com or scott@findmywayhome.com and we’ll make the introduction.

          Thanks for checking out the site!
          Josh

  63. Caroline on March 21, 2017 at 9:21 am

    Do you know any lenders that will use the actual IBR payment for the debt to income ratio? I’m in Southern California. I am currently in escrow, with the deal to cancel on Friday if I don’t get loan approval. Thank you for your help!

    • Scott Schang on March 21, 2017 at 9:56 am

      Hi Caroline,

      Yes, I am a lender in Southern California and we do a lot of these types of loans! I am sending you an email right now. We can save this escrow.

  64. Gloria Ridley on March 20, 2017 at 5:23 pm

    Hello do you know any lenders that use the IBR payment for debt to income ratio? I’m looking to purchase a home in the Pleasant Run area which is a suburb of Cincinnati, Ohio?

    • Scott Schang on March 20, 2017 at 6:17 pm

      Hi Gloria,

      Yes, I am sending an introduction now!

  65. Markesha Thomas on March 20, 2017 at 12:01 pm

    Do you know any lenders that will use the actual IBR payment for the debt to income ratio? I’m looking in the Dallas, Fort Worth (Texas) area.

    • Scott Schang on March 20, 2017 at 12:09 pm

      Hi Markesha,

      Yes, we do. I have your email address, I’ll send you an introduction to a lender friend that has a lot of experience with these guidelines. As long as the loan is not currently in a deferred status, you can use your IBR payment as it is reported on your credit report, or on a statement from the student loan lender stating that the loan is in repayment.

      Hope this helps?

  66. Janelle on March 17, 2017 at 6:06 pm

    Hello,
    Thank you for this article. Many seem to be in the same situation as me and my husband. We have yet to find a lender that will use my IBR rather than the 1% of my student loan debt. Using the 1% puts us over the DTI threshold. We have assets, credit scores in the 750’s, and are having a hard time getting a mortgage.

    • Scott Schang on March 17, 2017 at 6:24 pm

      Hi Janelle,

      I believe you just sent me an email as well? I sent you an introduction to a lender friend in PA that has experience with these guidelines and can help. Trust me, it’s not me, it’s the lenders that you’re talking to that don’t know the guidelines.

      Hope this helps?

  67. Marsha on March 11, 2017 at 3:07 am

    Hi, I too have high student loan debt around 150K. I have heard that it’s possible to get a loan through a conventional Freddie Mac loan but can’t find anyone in Florida to help me. Do you know of anyone. Thanks

    • Scott Schang on March 11, 2017 at 9:54 am

      Hi Marsha, yes, that is correct. As long as your loan is in repayment status, and if you are on an Income Based Repayment (IBR) plan, then yes, you can use your IBR payment when qualifying for a home loan.

      Send me an email to scott@findmywayhome.com and I can introduce you to a lender that has experience with these guidelines and can help.

      • Jamie on March 27, 2017 at 10:37 am

        Hi Scott,
        I live in Michigan. Please connect me with a lender that will use our actual IBR payment to qualify for a mortgage here.
        Thank you!

        Jamie

        • Scott Schang on March 27, 2017 at 11:35 am

          Hi Jamie,

          I have a very experienced lender friend in Michigan that can help. Just sent you an introduction!

          Hope this helps?

  68. Chelsea on March 10, 2017 at 12:41 pm

    We are in the same situation…is there anything we can do? It feels hopeless and it’s so hard paying $1100 without trouble in rent everymonth knowing it could very well be a mortgage!

    • Scott Schang on March 10, 2017 at 4:21 pm

      Hi Chelsea, if your student loan is in repayment, and on an IBR plan, you might have a chance at shaking that rent for a mortgage payment!

      Shoot me an email to scott@findmywayhome.com with the State you’re trying to buy in. I can introduce you to a lender that may be able to run some numbers and give you an idea of what options you might have.

  69. Chris in Phoenix, AZ on March 8, 2017 at 5:00 pm

    Just want to make sure I see this right. I have 192K in SL that I am getting ready in Sept to start paying back. My wife and I make a combined 8149.00 a month with zero credit cards or car payments. Is my best bet to use a 30 year Standard to reflect a 1296.00 payment or can I use an IBR (I borrowed before 2014) and go with that via Freddie Mac conventional?

    • Josh Lewis on March 8, 2017 at 5:04 pm

      Hi Chris,
      Your terms should be the same whether you use Fannie or Freddie guidelines. Since Freddie will allow you to use the IBR payment instead of the 1% Fannie uses, I would definitely go that route. Check your email, I have an excellent lender referral in Phoenix who knows the guidelines inside and out!

  70. Jayne on March 2, 2017 at 6:36 pm

    Same situation. Just got denied for HARP bc of DTI based on 1% of $190k. My actual payments are $60 and I’m enrolled in 20 year grade forgiveness. If I didn’t qualify for HARP, can’t imagine I’d be able to get conventional refi. My credit score is at around 630-680 depending on who checks. Please tell me there is something I can do to bring down my interest!! I’m recently divorced and need to bring down costs. The equity in my house is good now, but I bought it pre law school debt, so I don’t know that I’d be approved to get into a new house even if I sold this one bc of the student loans!

    • Jayne on March 2, 2017 at 6:38 pm

      *PS: I meant I’m enrolled in 10 yr loan forgiveness program.

    • Scott Schang on March 2, 2017 at 6:43 pm

      Hi Jayne,

      Fannie Mae will not allow you to use an income based payment when calculating your debt to income ratios for a mortgage loan.

      Is your home upside down? Is that why you were trying to use HARP? You can use your IBR payment if you use Freddie Mac underwriting guidelines.

      If you shoot me an email to scott@findmywayhome.com I can introduce you to a lender that has experience with these guidelines.

      Hope this helps?

  71. Hannah on March 2, 2017 at 3:45 pm

    Wouldn’t guaranteed loan forgiveness at the end of the term of a loan – 25 years for mine – provide for the “full amortization of the loan” within the term, even if the payment is zero? I have $65,000 in loans and a zero payment, and would otherwise qualify easily for an FHA loan with down payment assistance of $15,000 through the state HUD organization. I am a little brokenhearted to find that all the work I did this year to build my credit score was all for nothing.

    • Josh Lewis on March 2, 2017 at 4:47 pm

      Hi Hannah,
      Unfortunately the loan forgiveness is conditional based upon payments being made on time throughout the repayment term. BUT, you should be eligible for a 3% down loan following Freddie Mac guidelines. I don’t know if the assistance program you mention only works with FHA loans since it’s through HUD but this would be an option. Where are you located? If you want us to connect you with an expert who can help, just shoot me an email with your contact details: josh@findmywayhome.com.

  72. Hannah on February 27, 2017 at 3:58 pm

    Hi Scott-

    Do you know of any lenders in minnesota? I am in a very sinilar situation as your example scenario and my IBR payment won’t be accepted by our current lender. They will only consider 1% of the loan balance- $1400 per month. Unrealistic, I know. I feel like I need someone who understands student loans. Can you help?

    • Scott Schang on February 27, 2017 at 4:24 pm

      Hi Hannah,

      Yes, I can help. Are you making IBR payments now? Shoot me an email to scott@findmywayhome.com and I will introduce you to a lender friend of mine that has experience, and can help.

  73. Rebecca from FL on February 14, 2017 at 9:49 am

    I have 171K in student loan debt and because of the recent legislature changes, I thought I would never be able to buy my house. I have rented the same house since 09 and the owners want to sell it to me, and I want to buy it from them. We started with an FHA loan, but the lender had to back-pedal. He got me qualified for a conventional loan. My IBR payment is $150/month and that sure does beat the 1700 payment that 1% is estimating.

    Regardless of student loan repayment status, if you have a high student loan debt, conventional is the ONLY want to go. Thanks for this article Josh. Great (and up-to-date) info here!

    PS, we close on the house tomorrow! 🙂

  74. Tee on February 7, 2017 at 7:59 pm

    Hi Scott, do you have any lenders in MIssissippi that will finance with Freddie Mac and use my IBR payments?

    • Scott Schang on February 8, 2017 at 7:45 am

      Hi Tee, I have reached out to my network to see if I have anyone. I will shoot you an email directly with an introduction sometime today!

      • Natasha Royal on February 25, 2017 at 5:01 am

        I have been searching for a mortgage. I have student loans at 140k, getting an amortized payment is impossible because it’s against federal guidelines. I am on an IBR of $0 but did get an estimated IBR of $317. I need this payment to show on my credit report and also need a lender in Ct who is familiar with this. Also with down payment assistance. Thank you

        • Scott Schang on February 25, 2017 at 8:00 am

          Hi Natasha,

          A Conventional loan using Freddie Mac underwriting guidelines will allow you to use your IBR payment, as long as the payment shows up on your credit report, or you can get a statement from the lender showing what the payment will be.

          As far as down payment assistance goes, I’m not sure about that. Because you are restricted to what kind of loan you can use that will not require a fully amortized student loan payment, this may create challenges in finding any programs that fit into that box.

          Freddie will allow as little as a 3% down payment under certain circumstances (based on income and geographic location). I would recommend that you try to find that down payment, either by a gift from a relative, or maybe your 401k? Steven can discuss ways to get your closing costs paid for, but the down payment is going to make this infinitely more challenging.

          If you do not have to rely on an assistance program to cover your minimum down payment, you will have many more options available to you to buy your home. Does this make sense?

          Hope this helps?

  75. Carissa Wilson on January 23, 2017 at 2:06 pm

    Are there any programs that do not use the 1% in the calculations, but rather your actual payments that you are currently paying? As in income based repayments?

    • Scott Schang on January 23, 2017 at 2:08 pm

      Yes Carissa, there is only one option for using your IBR payment when qualifying for a home loan. That option is a conventional loan using Freddie Mac underwriting guidelines.

      If you shoot me an email to scott@findmywayhome.com, with the State you’re buying in, I can introduce you to a lender friend of mine that has experience with these guidelines.

  76. Laura on January 17, 2017 at 7:04 pm

    Hi Scott,

    I have a question. I am one of those w/a high student loan debt. Unless I strike gold it is unlikely I will ever pay off my loans. I am trying to buy a home, and need down-payment assistance. I am told that FHA will require DTI based on student loan payments that will never come to fruition. Is there down-payment assistance w/conventional loans? I am told the rules for calculating DTI/Student loans changed just a few days ago. I am in WA state, do you have suggestions? Thank you for anything you can provide.

    • Scott Schang on January 17, 2017 at 9:54 pm

      Hi Laura, conventional financing will allow down payment assistance programs behind it, but I’m not sure about the WA DPA program. If you send me an email to scott@findmywayhome.com, I have a lender friend in WA that might be able to help. You need to use a conventional loan using Freddie Mac underwriting guidelines to use your IBR payment when qualifying.

  77. Melissa Mcmillin on January 14, 2017 at 12:31 pm

    Hi, My husband and I have a total of 117,000 in student loans. We made about 79k together last year. Our income based payments are 180, 40, and 137. Our other debt includes a 319 car payment and 116 credit card payment. We have been searching for someone that knows how to approve our loans through Freddie Mac, but are running into issues. Most have told us that Freddie Mac and Fannie Mae have similar debt calculation policies and they must use 1% of the loan, even though the lower income based payment shows on our credit report. Even after one loan officer told us they use the amount on the credit report, we were denied because she tried to get me approved for an FHA loan, which obviously uses the 1% guideline. We are going through another bank that told us they just found out that they can go through an exception process for Fannie Mae that will allow us to use the payment on the credit report, but we are skeptical. Is there a document online that I can forward to the loan officers to convince them that Freddie Mac loans have different guidelines and we should be approved through Freddie Mac? It is really frustrating because we hear different information from every bank or loan institution we call. Do you have a recommendation for a loan officer in Indiana that can help us? Thanks!

    • Scott Schang on January 14, 2017 at 2:13 pm

      Hi Melissa, I have a lender friend that is experience with using Freddie Mac underwriting guidelines for a conventional loan. Shoot me an email to scott@findmywayhome.com, and I will make an introduction.

  78. Christy on January 3, 2017 at 7:35 pm

    Hi, I apologize that I am getting confused with the “documentation of a fully amortizing payment.” What does that documentation look like? Is that as simple as asking the Federal Loans repayment program to send you your IBR monthly repayment amount on an official record?

    Here’s our issue: My husband’s student loans are just over $200,000. My student loans are right at $50,000. We are told that out debt to income ratio is 59% because they calculate our combined student loans at 1% a month, and that it isn’t possible for an FHA loan of $180,000. We have 10k for a down payment. My husband’s salary is 53k and mine is 31k. We both just graduated from law school in 2016. However, with the REPAY plan, and the fact that we file taxes as married but separate, his payments are only $65 and mine are $30. We are just starting to pay them this month, but we have the documentation of our payment amount. It is not showing up on our credit report, though.

    Does this mean we just need to wait another month or two and our payment amount will be on the credit report, and then they will calculate our student loans at a smaller amount each month? Will this solve our problem and we can get a loan? please help! Thank you

    • Scott Schang on January 3, 2017 at 7:48 pm

      FHA will not allow you to use an Income Based Repayment (IBR) for qualifying. FHA is going to require you to use a payment that will pay off the loan by the end of the loan term.

      However, because you are on the REPAY program, you do not have an amortized loan, and your loan will not ever be paid off if I understand the terms correctly? Doesn’t this program allow you to have the loans forgiven after a period of time?

      The only option you would have is a conventional loan using Freddie Mac underwriting guidelines. They will allow you to use the statement showing what your payment will be, or will let you use the payment as it is documented on your credit report.

      I hope this helps?

  79. Jaw on December 14, 2016 at 8:18 pm

    Hello,

    I have a student loan debt in the amount of 153,000. I am on a revised pay as you earn repayment plan for my student loans. My payment is 45 s month. I am trying to get an fha a loan, but they are using the standard payment that will amortize which is 921. The repayment plan I am own is strictly based of my income every year. I gave to submit my tax returns and they calculate what I will pay. I also work in a public service field so after 10 years my remaining balance will be forgiven. Is there any way around this?

    • Scott Schang on December 15, 2016 at 9:18 am

      You will want to work with a lender that can offer Freddie Mac loans. Freddie Mac is a conventional loan, no different from Fannie Mae, other than subtle guidelines nuances. The ability to use an Income Based Repayment is one of those differences.

      If you would like, shoot me an email to scott@findmywayhome.com and I can introduce you to a loan officer that can help in your State (please include the State you’re buying in)

      Hope this helps?

  80. Dr. Greg Scott on December 11, 2016 at 12:01 pm

    I am in a similar situation as most people on here. Do you know of anyone in Kansas that can help me get a Freddie loan? Thanks

    • Scott Schang on December 12, 2016 at 3:28 pm

      I just sent you an email. What you are looking for specifically is a loan officer / lender that knows that Freddie Mac allows you to use the payment from a statement, or your credit report. Fannie Mae, and FHA are going to require that you use a fully amortized payment.

      Hope this helps?

  81. Josh Lewis CMC on November 17, 2016 at 3:30 pm

    queen528 Hi there, an IBR payment may be an option in your situation assuming you qualify under Freddie Mac guidelines (very similar to Fannie Mae but tighter than FHA and USDA). Shoot me an email with your location and I’ll see who I can connect you with that is familiar with all of your options. josh@findmywayhome.com

  82. Josh Lewis CMC on November 17, 2016 at 3:24 pm

    LisaJohnson7 Hi Lisa, sorry for the slow response. Email me at josh@findmywayhome and let me know where you are located and I’ll connect you with someone familiar with the IBR guidelines.

  83. Josh Lewis CMC on November 17, 2016 at 3:23 pm

    TMcIntyre So sorry for the delayed response. Shoot me an email and I can connect you with someone who can discuss your options in LA. josh@findmywayhome.com

  84. TMcIntyre on November 3, 2016 at 3:33 pm

    FYI-I live in Louisiana. Sorry for all the additional comments.

  85. TMcIntyre on November 3, 2016 at 3:22 pm

    Also, my husband pays $400/mo on IBR.

  86. TMcIntyre on November 3, 2016 at 3:16 pm

    Hi,
    I’m trying to purchase my first home and am having difficulty qualifying. I have 200,000 is student loan debt and am on an IBR plan of $234/mo (prior to this new monthly payment, I paid $0.00/mo. for 2 years). I have a714 credit score and make $50,000/yr; in May of 2017 my salary increases to $60,000. I’m trying to get a conventional loan to purchase a condo or townhouse, but I’m also open to whatever type of home I can get. I have been unable to get the the amortization schedule from my student loan servicer. Also, I’m just recently married and my husband has $200,000 in student loan debt and makes 100,000/yr. We have no other debt. Do I have any other options, indivually or in combination with my husband?

  87. LisaJohnson7 on November 3, 2016 at 11:11 am

    Hi,
    I am in a situation where I am having the worst luck with my student loan. I have 68k in loans and I am currently in a IBR program with a zero payment. I am in a situation such as many others with my debt to income ratio being too high and I am at a lost as to what to do. I have a car which will be paid off in 2018 (I am listed as the cosigner) but now I wonder if there is a way that I can get around this since I am the cosigner? Quickens loans is the only one who would work with me but I want to work with someone who will allow down payment programs. Any advice?

  88. Rcwilli3 on October 22, 2016 at 2:20 am

    Josh…I’m having a challenging time as others qualifying for a mortgae with student loans. Will you send me the name of someone in Florida that is knowledgeable of this process and can assist me?

  89. queen528 on October 19, 2016 at 9:21 am

    Hi Josh,
    Thank you for this article. Unfortunately, I’m having the same issue with my student loan debt at $55,000 which they are all deferred to 2019.. I’m still in school will be done in the spring, and I’m trying to get approved for my home. I received an conditional approval, and my home is scheduled to be completed in late January. Well apparently now my DTI is too high due to my student loan debt. It’s the only debt I have besides my car loan which is $14,000. We are working on a plan, but I’m not to confident that it will work. Should I apply for the IBR payment with my student loan? What is your suggestion. My credit score is in the high 600s.

  90. Josh Lewis CMC on October 18, 2016 at 10:57 am

    arielsmom08 Hi there! With a zero IBR payment, “most” programs require we use 1% of the balance to qualify OR provide evidence of the fully amortizing payment. With IBR loans it can be difficult, if not impossible, to get the servicer to provide you with documentation of the amortizing payment. Shoot me your contact info to josh@findmywayhome.com and I can connect you with our partner in NC.

    • Kim H. on January 3, 2017 at 9:37 pm

      Josh, is it easier to qualify for a mortgage if my IBR payment is $0 or at $132 with a student loan debt of approximately $68500? I am preparing to attempt mortgage pre-qual/approval so I figured if my payment was at $0, I would be forced to use the 1%, so I requested a recalculation and my credit report will update in a month and half with the new payment amount. Did I do the best thing or made a mistake in my recalculation timing in regards to mortgage approval?

      I also noticed another commenter from the Triad area in NC requested a referral to a lender who can help. Would you be able to send me that information as well?

  91. Josh Lewis CMC on October 18, 2016 at 10:54 am

    jarod347 Josh Lewis CMC  With the new IBR payments for both of you there should be a way to make it work. Shoot me an email at josh@findmywayhome.com and I’ll connect you with our partner in Oregon who can go through your options with you.

  92. jarod347 on October 18, 2016 at 10:40 am

    Josh Lewis CMC jarod347 Hi Josh, thank you for your reply! Unfortunately, there isn’t much that is reasonable about my student loan debt (I have $160,000 and my wife has $50,000). Right now we pay zero for my loans through an IBR, but we are paying the full amount for my wife’s. I have just resubmitted our income docs and also applied for an IBR for my wife’s loans. It looks like we will pay about $90 a month for mine and about $10 a month for hers. What is your sense about those payments being “reasonable”?

    We live in Oregon.

    Thanks so much!

    Jarod

  93. arielsmom08 on October 17, 2016 at 10:36 pm

    Hi Josh! This is all new to me, and I literally have just started looking into buying for the first time. I recently got approved for the $0 IBR plan, and I guess my question is, is that a bad thing? It seems fob what I’ve interpreted, is that is not always the goal. Could you possibly put me in touch with a lender in NC? Triad specifically is where I’m located.

  94. Josh Lewis CMC on October 17, 2016 at 10:27 am

    NancyFarmer Hi Nancy, check your inbox. I just sent you an email with contact info for a great lender who can assist you in FL.

  95. NancyFarmer on October 17, 2016 at 6:09 am

    These changes are huge! I sent you an email in hopes of attaining a referral for a lender in Florida. Thank you!

  96. Josh Lewis CMC on October 15, 2016 at 1:13 pm

    lady_s Sorry for the delayed response. Freddie will accept an IBR payment. Shoot me an email at josh@findmywayhome.com and I can get you a referral to a Michigan lender who is correctly interpreting Freddie guidelines.

  97. agates105 on October 13, 2016 at 12:35 pm

    Josh Lewis CMC I sent you an email please reply , I sent it again today.

  98. lady_s on October 11, 2016 at 11:47 am

    Thanks for the detailed article, Josh. I am going through a denial issue solely based on DTI ratio due to an IBR student loan. (They are using the 1% instead, and not as reported on the credit history report. Yes, is more than 0.) The only recommendation was to switch to a standard payment. Then they may use that to get me into a Freddie Mac with 5% down IF I can get an amortization document. During a consult with a different lender, I was offered a 3% down Freddie Mac but they still need a standard plan and the amortization document. Am I being too hopeful trying to find a way to get me approved with an IBR student loan in MI?

  99. jarod347 on October 11, 2016 at 11:31 am

    Hi Josh,

    I’m wondering what if even a $1 IBR payment (as an example) is enough to not fall under the zero payment category. Is there a number where the lenders have to round down to zero or is anything above zero good?

    Thanks!

    Jarod

  100. DanMetcalf on October 7, 2016 at 3:17 pm

    Scratch that… the site has it listed as II.A.4.B.(H)… which is still incorrect.
    Correct = II.A.4.(H)

  101. DanMetcalf on October 7, 2016 at 3:16 pm

    The section of the HUD code I found from the actual PDF of the HUD document is wrong.  I had to search for some of the words.  I was able to find it under HUD  Handbook 4000.1 Section II.A.4.(H)… the “II.A.B.(H)” from the document above is incorrect.  There is no “B”.  The only reason I’m being that specific is because I’m in the middle of trying to qualify for a mortgage with a VERY high repayment if used under the standard 1-5%.  I have to get a letter from my lender to prove what my payment is for the IBR.  Graduate level medical field loans ARE NOT CHEAP!  LOL!

  102. Josh Lewis CMC on October 6, 2016 at 3:30 pm

    Hallallen Sorry Bruce, it got filtered. Check your inbox. I have a great referral for you.

  103. Hallallen on October 6, 2016 at 4:30 am

    Good morning Josh,I sent you a email did you get it? My wife and I have a new found hope in getting a home now. Thanks for your work in this area.

  104. dudditz9 on October 5, 2016 at 1:51 pm

    Hi, thanks for this incredibly informative site and forum! I just graduated from college as a non-traditional student (i.e. older with a longer credit history) and was pre-approved for a mortgage but all while my student loans are/were still in their grace period. I have a credit score that is right around 700 and I have almost no debt other than my $60K in student loans. I will be a first-time homebuyer, and I am thinking that I will have to go with a FHA loan. What I am wondering is, when my loans come due in a month, and I had hoped to go on an IBR that has been quoted as $175 a month, will that possibly disqualify me from my pre-approval and/or a mortgage? Are there any other options that could/would make sense instead of IBR for a typical case similar to mine? Will FHA still take that 1% instead of my IBR payment, no matter what?

  105. Josh Lewis CMC on October 5, 2016 at 10:08 am

    mvanswol There are options, depending on the details of your student loan. If the new payment is showing up on your credit report, and is greater than $0, you should be able to use any of the Freddie Mac 3% down options. We have a great lender we can refer you to in MA with experience with student loan payments. It’s a common misconception most borrowers have that credit unions make “portfolio” loans from deposit funds and are able to make their own underwriting decisions. While this is true for the largest of credit unions, most operate as a traditional mortgage lender and underwrite to Fannie/Freddie guidelines so they can sell the loans in the secondary market. If your credit union is “debating” on what to do with the loan, it’s likely they don’t have a lot of experience with the options available OR they don’t sell to both Fannie and Freddie so they may be limited. 
    Shoot me an email with your contact info and I’ll have our MA resource reach out to you to discuss your options: josh@findmywayhome.com

  106. mvanswol on October 5, 2016 at 9:33 am

    I am having similar issues as most everyone on this site.  I am trying to get a mortgage with IBR plan.  I have tried with a credit union, but they are struggling to figure out what they are going to do.  I am a first time home buyer and trying to get into a program with a low down payment option.  I have been told that the information I have provided them from my student loan company about what my revised payment would be now that I have been promoted to teacher status was not sufficient and they are now debating whether they will accept a graduated plan or the 1% of the remaining balance.  The 1% option will significantly lower my buying power in MA.  I have a good credit score over 700 and am concerned about the affect shopping for a mortgage will affect this score.  I would love to hear any advice or recommendations you might have.

  107. Josh Lewis CMC on October 4, 2016 at 8:56 am

    Good morning Bruce, you should be good under the Freddie Mac guidelines. Shoot me an email at josh@findmywayhome.com and I’ll connect you with a lender who can help in Florida.

  108. Hallallen on October 4, 2016 at 5:19 am

    I live in  Florida

  109. Hallallen on October 4, 2016 at 1:25 am

    Hi My name is Bruce, my Wife and I  was told by our FHA loan originator that because we both have a IBR and we showed documents that my IBR repay was $46.00, and my wife is  $45 at this time, I have $62K IN student loan debt and my wife has $61k, we was told that the Mortgage Company is going with 1% which is  $620 for me and $610 for my wife and because of this we didn’t  qualify for a  $225k mortgage. My wife and I credit scores are in the  700 range.are there any other options for us.Thanks

  110. diakamo on September 30, 2016 at 7:23 pm

    Hello Scott, my name is Mo and just recently, my wife and I applied for and were approved for a home loan. But just today, our lender called us and told us that there was an oversight on their part and that they forgot to calculate our debt to income ratio using the 1% of our balance (since we are on the IBR plan). Our application had already been approved by the underwriter twice but they overlooked this issue. On our credit reports, it shows what we are paying on the loans and the balances but the report does not specify that we are on an IBR plan. Can you help? We are freaking out now. This news has left us dejected, angry, frustrated, sad and confused. When can I call you so that we can talk about this further. Please help.
    Thanks.

  111. josemnz83 on September 30, 2016 at 4:49 am

    Josh Lewis CMC josemnz83 Thanks for the response! I am located in TX. Unfortunately, since my loans are still in deferment, I do not have any payment reflected on my credit report. I suppose I could try to make a payment somehow but even if I made it today, it would likely take minimum 30 days for any activity to show up on credit report. It looks like waiting it out sounds like the best action. However, if I do that, will the underwriter not be concerned that the IBR will not fully amortize the loan at $100 monthly payments?

  112. Josh Lewis CMC on September 29, 2016 at 11:14 pm

    josemnz83 Jose, the Freddie Mac option should work perfectly for you as long as your IBR payment is not $0. They won’t accept the estimate as they require the payment to be reflected on the credit report. If you have documentation showing the actual IBR payment is different than what is showing on the credit report, we have a workaround but you wouldn’t be able to use an estimated IBR payment. Where are you located? We may be able to help or put you in contact with a lender who can. You can email me at josh@findmywayhome.com.

  113. josemnz83 on September 29, 2016 at 8:11 pm

    Hi. My name is Jose. I was preapproved for a conventional loan with 5% down, NO PMI, and 3.625 interest rate. I have 128k in student loan debt. I graduated in May and am scheduled to begin payments in December. Loans are currently in deferment. Underwriter requested that I pay off 16k of my student loans so that I am eligible for the Freddie Mac and that I am ineligible for Fannie Mae because they must use 1% of my student debt. However, I recently learned of IBR and Public Service Forgiveness Programs. I requested an “IBR estimate” and was told that payment would be about $100–way less than the $750 payment on a 25 year extended plan. Will Freddie Mac accept the new IBR “estimate?” Or do I have a better chance of paying the 16k and continuing the loan as is?
    Additional facts: All three of my credit scores are above 800 and I have no additional debt. Salary is 70k per year. Thanks. I am very happy that I found this forum. Probably should have looked for it before finding the house that I like : )

  114. Debpotter1426 on September 26, 2016 at 5:09 pm

    Thanks. Just sent you a msg.

  115. ScottSchang on September 26, 2016 at 2:15 pm

    Debpotter1426 Yes, I have a lender friend in NY that can help.  Can you shoot me an email to scott@findmywayhome.com ?  I will make an introduction

  116. Debpotter1426 on September 26, 2016 at 1:38 pm

    Scott. Looking for help in Rochester NY with my daughter who is on IBR repayment plan of zeto. Any lenders using the IBR repayment in loans in NY? Any help would be greatly appreciated. At a roadblock right now.

  117. Fratch on September 22, 2016 at 7:08 pm

    Hi there, my husband and I are in less of a predicament than the others but we are still looking for advice. We just moved back to Minnesota from Arizona and we decided to rent out the home that we currently own in AZ. We bought it on an FHA loan with 3.25% interest rate. We’d like to keep our home there as an investment, but with the 1% calculation on the student loans, we can’t qualify for another home loan here in MN anytime soon if we keep the house. We are both teachers on the REPAYE plan and we will eventually file for Public Service Loan Forgiveness. Do you have any advice for making it easier to qualify for a loan when we have already owned a home for 8 years and we’d like to purchase another? I have seen you mention that Freddie Mac still calculates the current payments. Does that include REPAYE? When will we be able to use our rental income on an application? Also, do you know any lenders in MN that are familiar with this process? Thank you!

  118. ScottSchang on September 21, 2016 at 6:39 pm

    multransholdings I do, shoot me an email to scott@findmywayhome.com and I can make an introduction!

  119. multransholdings on September 21, 2016 at 6:34 pm

    Hi Scott, do you have any lenders in FL that will do a refinance with Freddie Mac and use my IBR payments?

  120. multransholdings on September 21, 2016 at 6:09 pm

    SaMWe Hi, Have you tried creating that petition on change.com?  Hopefully it can generate as much signatures as possible!

  121. SamSamAnthaTyree on September 21, 2016 at 11:10 am

    Yes, you did respond to me already! Thank you!

  122. Shannon1980 on September 21, 2016 at 11:04 am

    Thanks for the quick reply! I’m in South Dakota.

  123. ScottSchang on September 21, 2016 at 11:03 am

    SamSamAnthaTyree Yes, I believe that I answered your email?  If not, shoot me an email to scott@findmywayhome.com and I will introduce you to someone in IL

  124. SamSamAnthaTyree on September 21, 2016 at 10:39 am

    I am also struggling to find a mortgage broker/lender that will use my IBR payment which is preventing me from getting pre-approved. Is there any lender/mortgage broker that you can suggest in Illinois that could help me with a Freddie Mac? Thank you!

  125. ScottSchang on September 21, 2016 at 10:36 am

    Shannon1980 Freddie Mac will not use a $0 amount, you need to find out what payments “would be” should you start paying.
    Also, keep in mind that the 1% is not set in stone.  1% is a default in the event that an amortized payment cannot be documented, and you’re using FHA financing to buy the home.
    Freddie Mac will use the payment that shows up on credit, or a statement from the lender.  Fannie Mae has a student loan calculator that is much less than 1%.
    You should definitely get pre-approved before looking at homes.  It is a simple process to get pre-approved, and because it’s the very first step in the process, there’s no risk of “going through the whole process just to get denied”.
    What State are you trying to buy in?  I may be able to introduce you to a lender that can help

  126. joshlewisCMC on September 21, 2016 at 9:15 am

    Shannon1980 ScottSchang
    Hi Shannon
    With Freddie, you need to have an IBR payment showing on the credit report that is greater than $0/mo. If the payment shows as $0, then Freddie will use 1% of the outstanding balance. Take a look back at the section on Fannie Mae guidelines. In June, they added a section to their guidelines that states you can use a calculated payment based off of a student loan rate index and a 30 year amortization (for loans over $100k like yours). This will usually result in a payment of about .5% of the outstanding balance, which is much less likely to prevent you from qualifying than the 1% calculation. Where are you located? We can connect you with a lender experienced with student loans in most states.

  127. Shannon1980 on September 21, 2016 at 8:51 am

    ScottSchang 
    Thanks so much for your advice! I stumbled upon this site when doing research, and I find it VERY helpful.
    Question: Can Freddie Mac still use a $0 amount for what the payment “would be?” Or if it’s $0, will they default to the 1% of the total balance? My document statement says $0 for the first year, but then it jumps to $1,900 based on a “regular” payment amount (even though I’ll re-qualify for IBR every year anyway).  I have $117k in student loan debt, no car payment, minimal credit card debt, and a 715 FICO score.
    Also, I’m in the PSLF program, so my debt will be forgiven before the IBR expires anyway.
    Just starting to look at homes, but I don’t want to go through the whole process just to get denied based on the 1% thing.

  128. eiw on September 20, 2016 at 4:28 am

    Hi — I own a home in MA. I have about $100,000 in student loans consolidated under Direct Loans. I have been on IBR for a couple of years and work in non-profits so I’m hoping to have it all forgiven in about 7 more years (unless the govt discontinues that program). I am thinking of selling my house and moving to VT (and buying property there). Do I have a prayer? My house is valued at about $235k, and I owe about $155k, so I have some equity. In addition to the student loans, I have one credit card (balance of about $12,000, unfortunately, due to a home repair I needed to get done). No other debt, (I own my car outright), good payment history, good work history — but the reason I’m thinking of moving is because my non-profit program is being de-funded by the gov’t (across the state). Would I be able to get a mortgage, or do I have to wait the 7 years until the PSLF happens?

  129. ScottSchang on September 17, 2016 at 6:04 pm

    chall12 Yes, I can introduce you to a lender that I know and trust.  Shoot me an email to scott@findmywayhome.com with the State you are buying in, and I will make an introduction.

  130. chall12 on September 17, 2016 at 4:03 pm

    ScottSchang chall12 jafhome7  I love how quickly you respond to my questions…you have been a big help. Do you know of any lenders in my area that could assist me with getting the mortgage loan process started? I was recently working with someone from my bank and her response to me was “there are so many changes going on with the FHA guidelines that I am still learning myself…im not sure how to help you, so let me know if you find a way around it.” I am looking for an underwriter who is experienced and knowledgeable because I am new at this. Your resources will be greatly appreciated. Thanks!

  131. ScottSchang on September 17, 2016 at 10:42 am

    chall12 jafhome7 Freddie Mac is a Conventional loan program.  It is very similar to a Fannie Mae Conventional loan program, except for very subtle differences in how Freddie Mac treats certain things, like Student Loans.
    Currently, Freddie Mac is still using the same guidelines as Fannie Mae did before the recent change.  The guideline states that if a payment appears on your credit report (for the student loan), that the underwriter can use that payment amount, regardless of whether or not it’s fully amortized.
    If there is no payment on the credit report (which is common with deferred loans), then we can use a statement from the student loan servicer stating what your payment “would be” should you start paying it today.  Again, the underwriter can use this payment amount, regardless of whether or not it’s fully amortized.

  132. chall12 on September 17, 2016 at 7:26 am

    jafhome7  What are the guidelines and qualifications for Freddie Mac?

  133. jafhome7 on September 16, 2016 at 2:17 pm

    Monthly payment can even be 0 but had to be on credit report

  134. jafhome7 on September 16, 2016 at 2:16 pm

    I got the info on here and I found someone local who was willing to do it, then once the lender that I was using heard another company was going to do the loan they said they could do it I told them about Freddie Mac …I got the info from this site though so thank you very much ….I close on Monday 9/19. Another thing ….you cannot be in deferment, you have to be making a monthly payment and that needs to be on your credit report or they will hit you with 1%, or if your loans are in deferment they will hit you with 1% so make sure you have a monthly payment
    Thanks

    • Jaw on December 24, 2016 at 10:23 am

      Where are you located? Can you give me the lenders info.? I need to find a lender like this.

  135. ScottSchang on September 16, 2016 at 2:03 pm

    jafhome7 No worries at all!  You’re a ROCK STAR, and we really appreciate you sharing your experience with others, it’s incredibly valuable and you’re awesome!  Thank you so much 🙂

  136. jafhome7 on September 16, 2016 at 1:42 pm

    sorry about that I was just trying to help ….yeah Freddie Mac can and will do it good luck

  137. ScottSchang on September 16, 2016 at 1:07 pm

    This is a great conversation.  As the owner of this site, I would like to ask that you do not reference specific lenders, because this is not a lender issue.  It is a guideline issue, and your loan officer’s ability to know their guidelines, and give accurate advice.  Freddie Mac still allows us to use IBR payments IF the payment reports on your credit report, OR if you can get a letter from the student loan provider stating what your IBR payment “would be” should you start making payments. 
    Any lender or broker that has access to Freddie Mac underwritten loans can use the IBR payment when qualifying for a home loan, and quite honestly, that’s most lenders.  The challenges being had here are the result of inexperienced or uneducated loan officers giving bad information.
    I have a network of pre-screened loan officer friends across the Country that can help.  If you are having a hard time with your current loan officer, leave your question here, or shoot Josh an email with your situation and State, and we will introduce you to an experienced loan officer that can help.

  138. jafhome7 on September 15, 2016 at 9:28 pm

    Yes with Freddie Mac you should try guaranteed rate

  139. chall12 on September 15, 2016 at 8:44 pm

    Hi, today I was very dissapoonted when I went to the bank to start the process of buying a home. I have a credit score over 700, I have $119,000 in student loans and I’m utilizing 13% of my credit cards. I am currently on the IBR program, but I was unable to qualify due to my debt to income ratio with the 1%. Can I get a mortgage loan?

  140. LaWandaBlakely on August 24, 2016 at 4:19 am

    Hi Josh,
    I’m in Atlanta, Ga I’m so frustrated and defeated by all of this information and would love to find a lender/consultant/originator who understands the intricacies of IBR and will help me find a way to home ownership. Ive gotten my credit score to a pretty solid number. I hate that my decision to obtain advanced degrees is what’s holding me back. Can you recommend anyone in the area that may be able to help me? Thank you!

  141. homebuyer101 on August 20, 2016 at 3:35 pm

    Hi. I am currently in a similar situation. I am trying to get a conventional home loan for $350K. However, because I’m on the REPAYE program ($179/month) for my student loans i cannot provide a fully amortized statement of my student loans. Thus, the lender will have to use 1% of my student loans ($117K). I don’t have any other debt except another private student loan that i’m paying at $457/month. My income is $7800/month. The lender is saying i may not qualify due to my school loan payment at 1%. Should i change my student loan payment plan back to a standard payment plan at $661/month for the next 30 years to qualify?

  142. joshlewisCMC on August 10, 2016 at 12:17 pm

    caikco 
    Shoot me an email – josh@buywisemortgage.com –  with the following info and I’ll have our contact in Florida reach out…

    1. Best phone number
    2. Target purchase price
    3. Funds available
    4. Your credit scores
    5. Your total student loan balance
    6. Your monthly student loan payments

  143. caikco on August 9, 2016 at 1:40 pm

    joshlewisCMC I find myself in a situation where I’m being denied a conventional 30-year fixed because of Fannie Mae’s new student loan mumbo jumbo. I’ve been offered an in-house 30yr 10/1 ARM that I’m not thrilled about. I’m going to contact Guaranteed Rate, but do you have any other recommendations for Freddy Mac in Florida. Time is of the essence, so I’m kind of interested in RP Funding, who advertises a 10 day to close program, but I don’t know which guidelines they use? Any ideas on how to make this process quick AND approved will be greatly appreciated. Thanks.

  144. SaMWe on August 8, 2016 at 6:36 am

    Subject: Revert Fannie Mae’s change to the treatment of Student Loans
    That’s why I created a petition to The United States House of Representatives, The United States Senate, and President Barack Obama
    http://petitions.moveon.org/sign/revert-fannie-maes-change?source=c.em.cp&r_by=16266348
    Thanks!

  145. joshlewisCMC on August 7, 2016 at 9:54 pm

    jewels2u85  I’m sorry you are being given an incorrect answer. I know several people who I could not help directly since they were outside of CA were able to get their mortgage approved through Guaranteed Rate using Freddie guidelines. I have a friend approved in Indiana who has helped many FIndMyWayHome readers. Email me the details of what you are trying to do (purchase price, down payment, etc) and I will have her get in touch with you! josh@buywisemortgage.com

  146. joshlewisCMC on August 7, 2016 at 9:54 pm

    jewels2u85  I’m sorry you are being given an incorrect answer. I know several people who I could not help directly since they were outside of CA were able to get their mortgage approved through Guaranteed Rate using Freddie guidelines. I have a friend approved in Indiana who has helped many FIndMyWayHome readers. Email me the details of what you are trying to do (purchase price, down payment, etc) and I will have her get in touch with you! josh@buywisemortgage.com

  147. joshlewisCMC on August 7, 2016 at 9:54 pm

    jewels2u85 I’m sorry you are being given an incorrect answer. I know several people who I could not help directly since they were outside of CA were able to get their mortgage approved through Guaranteed Rate using Freddie guidelines. I have a friend approved in Indiana who has helped with many Boomerang Buyers who visit the site. Email me the details of what you are trying to do (purchase price, downpayment, etc) and I will have her get in touch with you! josh@buywisemortgage.com

  148. jewels2u85 on August 5, 2016 at 3:38 pm

    I tried a lender in Indiana and the rep said this was incorrect and Freddie Mac does the 1%. I am so frustrated because I was preapproved for an FHA loan then the guidelines changed. Anyone out there that has any advise for me in Indiana?

  149. AndreaOsborne on August 4, 2016 at 3:13 pm

    Fueled4Life

  150. LarryRogers on August 1, 2016 at 7:40 pm

    Josh, I sent you an email with my scenario, a request for some ideas and leads for mortgage professionals in my area, Northern Illinois, who can help me through this mess. Please take a moment and let me know your thoughts. Thanks!!!

  151. joshlewisCMC on July 26, 2016 at 11:33 am

    jpstinson413 Hi Jackie, my partner Scott has a colleague approved in NY that he refers clients too that should be able to help. Email me at josh@buywisemortgage.com and I’ll get you his info.

  152. jpstinson413 on July 25, 2016 at 4:17 pm

    Hi Josh,
    I’m in Western New York (between Buffalo and Niagara Falls). I’m so frustrated and defeated by all of this information and would love to find a lender/consultant/originator who understands the intricacies of IBR and will help me find a way to home ownership. Over the last couple of years I’ve eliminated most of my debt (except student loans) and have gotten my credit score to a pretty solid number. I hate that my decision to obtain advanced degrees is what’s holding me back. Can you recommend anyone in the area that may be able to help me? Thank you!
    Jackie S.

  153. newazp on July 19, 2016 at 2:09 am

    Hello,
    I am trying to get a mortgage.  Currently on IBR, but loan is not being approved because monthly payment is just below $500 but when calculated 1% of the balance it comes out to be $3600.  What other options do I have?  Can you please help.

    newaz.hossain@gmail.com

  154. joshlewisCMC on July 18, 2016 at 5:04 pm

    Fueled4Life Where are you located? We have a network of lenders throughout the country that can help!

  155. Fueled4Life on July 18, 2016 at 4:48 pm

    Thanks for sharing this info Joshua. I’m currently looking into refinancing on an IBR if you have any recommended lenders please share. Thank you in advance.

  156. joshlewisCMC on June 26, 2016 at 9:14 pm

    Glad to see the conversation here. Since the current administration’s preferred policy response to the large and growing amount of outstanding student loan debt is to support IBR options such as PAYE (Pay As You Earn) AND, since the government also directly or indirectly controls the 5 major mortgage programs in the US (FHA/VA/USDA/CONVENTIONAL) you would think that there will be some movement in the direction of more common sense underwriting as more and more people have student loan repayment programs that do not fully amortize, either through IBR, forbearance or deferment.

    In the next week, I’ll be updating this article with the FHA changes that go into effect this week, as well as changes Fannie Mae implemented on 5/31/16, AND commenting on the issue impacting the 3 of you.

    In regards to Freddie Mac/LP, I’m reading between the lines here but I’m thinking the difference between Joshua’s situation and Lisa’s is that Lisa’s IBR currently has no payment while Joshua’s does have a payment. Let’s look at the most recent Freddie Mac (3/2/2016) guidance:

    Payments on all installment debts with more than 10 months of payments remaining, including debts that are in a period of either deferment or forbearance. Examples of installment debts with deferred payments include:
    Debts on furniture, household items and automobiles on which the initial payment is delayed for a period of time as part of a promotional campaign by the merchant

    Student loans on which the repayment period has not yet started because the Borrower is still in school or payment has been suspended for a period of time with the approval of the creditor
    When a monthly payment on an installment debt is not reported on the credit report or is listed as deferred, the Seller must obtain documentation verifying the monthly payment amount included in the monthly debt payment-to-income ratio. If no monthly payment is reported on a student loan that is deferred or is in forbearance, and there is no documentation in the Mortgage file indicating the proposed monthly payment amount (e.g., the loan verification letter), 1% of the outstanding balance will be considered to be the monthly amount for qualifying purposes.

    Examples of documentation of the required payment amount include:

    A direct verification obtained from the creditor
    A copy of the installment loan agreement obtained from the Borrower, or
    If payments are currently deferred, the payment amount that will be required once the deferment or forbearance period has ended, as stated in a copy of a financial institution’s studentloan certification or the installment loan agreement

    Let’s start with what it doesn’t say. In the entire Freddie Mac selling guide there is NO MENTION of income based repayment plans, which is odd since FHA and Fannie Mae have gone out of there way to specifically address IBR and how to qualify borrower with IBR plans.

    So, Joshua is correct that the guide does not mention IBR BUT that does not mean that we are in the clear for someone with NO PAYMENT reporting.  This is a gray area in the guidelines and is left for underwriters to interpret since the guide is silent on IBR plans. MOST all underwriters I have spoken with take the approach that IBR is in effect a partial deferrment or forbearance based off of current income.  As a result, that leaves us with 2 options:

    Use 1% of the outstanding balance (which sucks and kills most deals)
    Get documentation from the lender showing what the actual repayment terms WILL BE
    A direct verification obtained from the creditor
    A copy of the installment loan agreement obtained from the Borrower, or
    If payments are currently deferred, the payment amount that will be required once the deferment or forbearance period has ended, as stated in a copy of a financial institution’s studentloan certification or the installment loan agreement

    In this regard, Fannie Mae CAN be an option as the guidance they published 5/31 offers another option for determining a payment for qualification purposes that almost ALWAYS comes in far less than 1% of the outstanding balance:

    SEE ATTACHED IMAGE FOR CALCULATION EXAMPLES

    This will be a particularly good option for those with LARGE outstanding balances as the long repayment periods will result in a payment much lower than the absurd 1%. As an example, I have a client I’m working with who owes $214,000 on her student loans. With 1%, $2140, she doesn’t qualify for much of anything. With the calculated payment of $1057 we can get her into a home.

    Thanks for reading and please check back later this week when this post is updated to reflect all of the recent changes! Good luck with your loans, feel free to reach out by phone or email if I can help.

  157. AndreaOsborne on June 26, 2016 at 8:33 pm

    I appreciate the info also. There is a lot of confusing and conflicting information out there so it’s great to have the information ahead of time. Keeping my fingers crossed that my loan gets approved.

  158. JoshuaBall on June 26, 2016 at 8:04 pm

    I’m happy people like Mr lewis are getting this information out to people. It’s amazing how big of a problem ibr has become in the mortgage arena. I had just assumed that was my monthly payment was, is what would be counted against me in the debt ratio. Many people find out once they are already in the process. So kudos to Mr lewis for getting all this out to folks.

  159. JoshuaBall on June 26, 2016 at 7:43 pm

    Yeah it would be nice if the rest of the lenders would follow suit, and follow the guidelines and relax there overlays. I was ready to sell my business and leave the state because I couldn’t get a home, all because of the completely arbitrary way they use ibr payments in the debt ratios.

  160. AndreaOsborne on June 26, 2016 at 7:38 pm

    Thanks, I’m working with Guaranteed Rate now! Different person but hopefully they can speak with each other if I run into a problem. Thanks so much!

  161. AndreaOsborne on June 26, 2016 at 7:26 pm

    JoshuaBall joshlewisCMC LisaSellars

    Hi there.  My file is going to underwriting this week so we’ll see what happens.  I have a graduated repayment plan (similar to IBR) and I know Freddie Mac is the only one who will accept this payment.  I am working with a mortgage broker so I hope they are familiar with this situation and can find a lender who will accept the payment listed on my credit report.  The anxiety over this whole situation is brutal, I’ve been sick to my stomach every day wondering if this mortgage will get approved.  

    Joshua, I would appreciate you lenders name if you are willing to share. I feel that I need a backup quickly if this doesn’t work out.   Thanks.

  162. JoshuaBall on June 26, 2016 at 5:39 pm

    JoshuaBall joshlewisCMC LisaSellars 
    Hi Lisa. I feel your frustration as I was told the same thing by 99% of people. The problem you are running into is that they all work with lenders that use “overlays” or additional rules they place over the guidelines. The actual Freddie mac guidelines say nothing about 1%. Yes for deferred student loans that is coorect, but IBR is not a deferrment, its a loan in actual repayment, so you need to find one that goes off the actual guidelines without any additional overlays. It took me forever, but I finally found somebody. If you cant find help anywhere else, I will give you his info. I would rec not waiting too long though, as you can see with FHA, the guidelines can change at any point. I have no clue why lenders are going away from IBR, as millions and millions of more students will be enrolling in it, as the govt continues to expand access to it.

  163. LisaSellars on June 26, 2016 at 5:08 pm

    JoshuaBall joshlewisCMC LisaSellars Thanks for the information. I have an enormous amount of student loan debt but am 3 years into the public loan forgiveness program. I currently have zero payment under IBR but that will change soon due to an increase in income. I talked to a lender the other day and she informed me that 1% of the balance would be used against the Debt-to-Income ratio. That one factor destroyed my chances of purchasing my own home. It is really frustrating because I have almost no other debt, will pay very little under IBR, and will have the loans forgiven. Besides, the IBR payment will only increase proportionate to income. It is a really dumb rule. Congratulations on your home. So is Freddie Mac the way to go or did you just get lucky?

  164. JoshuaBall on June 25, 2016 at 8:32 am

    joshlewisCMC LisaSellars JoshuaBall

    Although the Freddie Mac listed above seems incorrect. I am closing on my house 06/27/2016 via Freddie Mac, and they are using my actual IBR payment, the only one I could find that would take the actual payment.

  165. joshlewisCMC on June 25, 2016 at 8:28 am

    LisaSellars JoshuaBall Lisa, it is true that FHA has made changes and will no longer accept IBR repayment terms for qualification. We will need to provide proof that they payment is fully amortizing OR use 1% of the loan balance as the monthly payment. 1% is usually significantly higher than the actual amortizing payment as student loan interest rates are typically quite low and the repayment period fairly long.

  166. LisaSellars on June 24, 2016 at 9:47 pm

    JoshuaBall
    Why? I thought they were loosening up the rules (1% instead of 2%). What is your source?

  167. JoshuaBall on May 8, 2016 at 11:40 am

    No more FHA – IBR come 06/30/2016.

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