Skip to main content

Student Loan Debt Guidelines Simplified by Fannie Mae

Student Loan Debt Guidelines 
Simplified by Fannie Mae

 Tackling Student Loan Debt
It's been a long time coming, but Borrowers that hold Student Loan Debt may have finally caught a break ... 

Made effective on April 25, 2017, Fannie Mae gave Mortgage Lenders a much more definitive process with which to calculate Student Loan Debt ... a simplification that was definitely needed and long waited for. Until this change, it had been a real challenge for Mortgage Lenders to compute the actual Student Loan Debt of a potential Borrower.  


Not all Student Loans get repaid in the same way.  Nor do all Student Loan Services report Student Loan Debt the same way to the Credit Bureaus.  The waters were pretty muddy as to how to use the info available, if it was available at all.

The new change by Fannie Mae addresses the Debt-to-Income - Qualifying  (DTI) ratio calculations used by Mortgage Lenders while considering Student Loan Debt.  The new simplification states:  

     Mortgage Lenders can now accept the Student Loan Debt payment amount listed on a Credit Report.  If the Student Loan Debt does not appear on the Credit Report, Mortgage Lenders can use 1% of the outstanding debt ... or ... a manually calculated, fully amortizing payment.  

While this simpler approach won't help every potential Borrower, it removes some financing obstacles and makes it easier for Mortgage Lenders weighing mortgage approval for those applicants with Student Loan Debt.  It should open the door for more potential Borrowers with Student Loan Debt to qualify for a Mortgage and buy homes.

April was a busy month for Fannie Mae, as they also announced they're loosening another lending guideline.  

The guideline referred to now reads:
  • Certain debts paid by non-Borrowers can be omitted from a Borrower's Debt-to-Income - Qualifying Ratios (DTI) when the past 12 months of payments have been made satisfactorily.  (This addresses debt reporting on a Borrower's Credit Report (such as credit cards, auto loans, and student loans) that is paid by someone other than the Borrower.
It also addresses possible Refinance opportunities:
  • Student Loan Cash-Out Refinance: Offers homeowners the flexibility to pay off high-interest rate student debt while potentially refinancing to a lower mortgage interest rate.  

These announcements 
 Have Mortgage Questions? Ask Them NOW!are positive signs as they provide hope, assistance, and relief to those with Student Loan Debt.  They are also an indication of a "relaxing" lending climate as we head into the busy summer real estate market.  

At minimum, they show a general movement in the right direction to address the crushing Student Loan Debt keeping so many young Americans out of the housing market.  These timely changes should allow more of these types of Borrowers to qualify for Conventional Loans.

So, what should a hopeful New Lenox - Chicagoland Home Buyer/Borrower with Student Loan Debt do next?  

Take the following step-by-step action:
  • Assess your Student Loan accounts
  • Educate yourself on ALL options available to you regarding your Student Loan Debt
  • Make adjustments to your accounts that address your current and long-term needs
  • Seek guidance and assistance from me, your Mortgage Originator.  Ask questions! 

These recent changes will have an impact.  Avenues to gain Mortgage Approval will be opened for many.  Does that include you?  To know for sure, you need to ask questions and take action to find out.

If you're hoping to buy a New Lenox - Chicagoland home, take that action now.  Contact me to discover what financing options are currently available to you ...

 Contact Me to Find Out More!

* Looking to find what possibilities exist for you? Hoping to Buy or Refinance a Home in New Lenox, Will County, 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'm 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


  Twitter Account of Gene Mundt, Mortgage Lender   LinkedIn Account of Gene Mundt, Mortgage Lender   Facebook Acct. of Gene Mundt, Mortgage Lender   Pinterest Acct. of Gene Mundt, Mortgage Lender   
 Trulia Acct. of Gene Mundt, Mortgage Lender     Gene's Chicagoland Blog/Gene Mundt, Mortgage Lender 

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.

Your Referrals are Always Appreciated and Welcomed!


Popular posts from this blog

Property Addresses: Gettin' Down to the Nitty Gritty

Property Addresses:   Gettin' Down to the Nitty Gritty

Take just a second and read through the following statements ...

“The devil is in the details” 
... "in life, it is often the tiny details that end up 
being the most important"

"Get Down To The Nitty Gritty"

“Little details have special talents in 
creating big problems!” 

“Sweat the details”

"Success is the sum of details"

Details ...Details ... it's all about the details ...
     And I'll admit it, I'm a bit of a nerd about them.  My whole family is.  Details, the intricacies, the little things ... they matter to us.
When I was growing up, a typical conversation (and argument) between my brothers and myself at the dinner table or in the backyard centered around "details".  It didn't matter what the topic was, it was the minor differences ... the details about the topic ... that we argued about.  I'm sure we drove our parents crazy.  
Sports statistics and games ... minutiae rega…

Ready for Fall? It's Arriving Soon

Ready for Fall?  It's Arriving Soon

Friend ...

Maybe it's because football season has started. Maybe it's the kids being back in school. Or because the night air is cooler. But a sense of Fall has arrived here in Chicagoland ...

The Fall Season brings changes with it. Changes in temperatures. Changes to the clothing we wear. Our focus seems to shift with the coming of shorter days, falling leaves, and crisp air.

Fall can be the perfect time to do a multitude of things. You can prep your home for the upcoming winter weather ... or for Fall listing and sale. 

But whether you're moving on or staying put, Fall is a great time to declutter and organize your home inside and out ... and your finances too.

I've googled like crazy to find interesting articles filled with Fall info, ideas, tips, and photos. Articles that will help you usher the Fall Season in at your house. I hope you enjoy reading the articles offered below and that they inspire you to make any needed changes.


Paper or Paperless billing? Which serves YOUR needs best?

Paper or Paperless billing?  Which serves YOUR needs best?

These days, companies are under pressure to go "green" and become more environmentally friendly.  As a result, an increasing number of businesses are offering their customers a paperless option with which to receive and pay their bills. 

There are obviously many positives to be found within these paperless services:

Trees are saved  Reduced postage costs  Less paper documentation to organize or save/storePossible rewards for switching to paperlessPayments can often be made/posted same-dayAutomated payments can be set-upMore
But I can tell you from my vantage point as a Chicagoland/IL/WI Mortgage Originator, there are also negatives to be found within paperless methods.  For some of my mortgage clients, the choice of going "paperless" just hasn't worked well.

 For some, an email or text reminder regarding payment of bills has not been enough. They NEED a paper billing to arrive in their mail. 

Their paper bil…