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Mortgage Change With Real Impact: FHA to Loosen Standard Regarding Student Loans

Mortgage Change With Real Impact:
FHA to Loosen Standard Regarding Student Loans

     In recent months, it appears that mortgage lending practices are trending in favor of Borrowers ...  

     This is great news after years of restrictive guidelines implemented as a result of the mortgage crisis and real estate downturn.

     Some examples of this trend to more favorable borrowing practices are:
  • Fannie Mae re-invented their 3% Down financing program, known as HomeReady, that showcases more options that help Borrowers obtain financing for their Personal Residence
  • Private Mortgage Insurance on Conventional Loans became less costly to Borrowers putting less than 20% down payment on their home purchase
  • And FHA announced an update pertaining to Student Loans and how they'll be viewed.  A new method for calculating and accounting for "unknown re-payments" Student Loan debt was put into practice. 

      Beginning June 30, 2016 ... FHA significantly reduced the calculations Lenders must apply for certain Student Loan Payments.  For many home buyers that have been kept out of the home buying market as a result of their Student Loan debt, this was very welcome news.  

     The simply stated version of this revised Underwriting Guideline, is found below:

       Consistent with industry practice, the revised guidance allows the same calculation criteria to be applied regardless of the student loan payment plan type (such as income-based payment plans) or deferral status, and also includes:

  • A 50 percent reduction in the percentage used to calculate monthly student loan obligations, or the use of the actual documented payment when the payment fully amortizes the loan over its term. This may result in increased purchasing ability for some borrowers, while ensuring borrowers have the long-term ability to meet debt obligations.
  • The separation of student loan policies from other deferred obligations and installment loans, including future incorporation into the Single Family Housing Policy Handbook 4000.1. This separation provides greater clarity for mortgagees on the unique treatment of student loan payment calculations versus the calculations required for other deferred obligations.

     But the bottom line regarding these changes is:  

     If you thought your Student Loan debt would keep you from being approved to buy a home .... or you thought the amount you'd qualify for would be less because of Student Loan debt ... relief may have arrived. 

     As always, it's best to contact me so we can do a full analysis of your current (and total) financial situation.  Only then can you get up-to-date answers as to current Mortgage and home buying options available to you.

     *  Hoping to Buy or Refinance a home in Chicago or elsewhere in the Chicagoland area?  Contact me!  I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:

Gene Mundt

Mortgage Originator  -  NMLS #216987  -  IL Lic. #031.0006220  -  WI Licensed
American Portfolio Mortgage Corp.
NMLS #175656

Direct:  815.524.2280
Cell/Text:  708.921.6331
eFax:  815.524.2281

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Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:  Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including:  The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL & WI

Referrals are Welcomed!


  1. Any person can get Mortgage Insurance on Conventional Loans turned out to be less expensive to Borrowers putting under 20% initial installment on their mortgage rates ottawa


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