Profile picture for amyclrk06

New FHA rules and income based student loan repayment

I was pre-approved for an FHA mortgage last year but decided to hold off for a couple months on purchasing due to some expenses that came up. I tried to start the process again this past week to get another pre-approval, but was now told that I won't qualify for the amount I'd like because FHA has changed the rules on income based student loan payments as of the start of 2014. My credit score is good (around 750) and I have a decent income, but my student loans are relatively high.

The loan officer said that FHA now requires them to use the highest possible payment I would make on my student loans (the standard 10 year repayment) which puts my DTI too high for the mortgage I'd like. I know the DTI rules changed this month, but I haven't seen anything else that mentions how they perceive IBR student loans. I also realize that people have had trouble with them in the past with certain banks, but she made it sound like it was an across-the-board FHA change. I contacted another mortage officer who was recommended to me, but he didn't seem to know anything about it. So, I'm not sure if this is true to all FHA loans or just those through this particular bank. I can change my student loan plan back to the extended payment plan or try again with another bank, but before I go through the hassle, does anyone know if this is true for the IBRs and all FHA loans?


Thanks!

  • January 22 - US
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Answers (5)

You need to talk to an experienced LO to give you some helpful accurate advice. 

Contact me for help.

Best of luck...

  • January 26
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Man that irritates me! I am so sick of hearing about Rookie LOs who are telling consumers that FHA or VA or whatever won't allow something when in fact they do. So much misinformation out there. How's the poor homebuyer ever going to know what the real story is? Ridiculous!

Sorry for my rambling. It's just I hear these ridiculous stories over and over again how people are told bogus information. I'll say again and again. Buyers Beware! Pick your Loan Officer and Realtor wisely! It just may cost you your dream home.

Best of Luck!
  • January 22
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I agree with the others.  You may just be dealing with a bank that has some conservative overlays.  Get a second opinion.  Would be happy to help
  • January 22
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Profile picture for GMerino
I would change plan your plan to the extended loan plan so that your debt to income ratio comes back down.  Provide the paperwork showing the new plan and that is what the underwriter will take. 
  • January 22
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The DTI rules did change this month, but it really doesn't affect FHA loans too much. Some lenders are still able to go up to 56.99% back end and it still qualify as QM. Do you have current statements for the loans? If you are on an income based repayment plan, your payments should reflect this. I'd be happy to take a look for you. 

Different companies are going to have different overlays, especially with the new Qualified Mortgage (QM) rules. Your best bet is to talk with a couple well reviewed Loan Officers who can guide you in the right direction. Feel free to contact me through my profile as I rarely go back to check out questions I've answered.
  • January 22
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