Tag: first time home buyer student loans

Student Loan Guidelines for Kentucky Mortgage Loans 


Student Loan Guidelines for Kentucky Mortgage Loans 


FANNIE MAE LOANS IN KENTUCKY 
The monthly amount provided on the credit report. If the credit report does not provide a monthly payment, or if the credit report shows $0 as the monthly payment (which may be the case for deferred loans or loans in forbearance), the lender must calculate a qualifying monthly payment using one of the options below: (This is not greater or lessor of, just one of the below.)
• 1% of the outstanding student loan balance, or
• A fully amortizing payment using the documented loan repayment terms
• For student loans associated with an income-driven repayment (IDR) plan, if the payment is $0, this
can be used to qualify the borrower only if the loan is not in deferment
FREDDIE MAC HOME LOANS IN KENTUCKY
Student loans in Repayment:
• Regardless of payment vs balance you can use the payment shown on the bureau
• If the payment shows $0.00 simply use .50% of the loan amount
Student loan in Deferment or forbearance: You can exclude the payment with any of the following:
• Student loan has 10 payments or less
• If the full balance is currently deferred and will continue to be like an employment-related plan.
• The borrower can prove they currently meet the requirements of student forgiveness, cancellation, discharge or employment-contingent repayment plan

Kentucky FHA Home Loans

Regardless of the payment status, the Mortgagee must use either:• The greater of:
o 1 percent of the outstanding balance on the loan;
o or the monthly payment reported on the Borrower’s credit report; or
• Or the actual documented payment provided the payment will fully amortize the loan over its term.
Kentucky VA Home Loans
If deferred for 12 months or more from the VA loan closing, the debt need not be considered in the analysis. If a student loan is in repayment or repayment is scheduled to begin within 12 months of the loan closing date, the monthly payment must be included in the ratio and residual income analysis. Calculate each loan payment using the greater of:
• 5 percent of the outstanding balance divided by 12 months. .42% of the balance.
• Monthly payment from the credit report
If the payment on the credit report is less than the 5% calculation, obtain a written statement from the student loan servicer dated within 60 days of the VA loan closing that reflects the actual loan terms and payment information for each loan. Documented income-based repayments for student loans may be used to calculate the ratio and residual income. However, if the income-based repayment is $0, it must be documented to continue at least 12 months after the loan closing date.
Student Loan Guidelines (Cont.)
Kentucky Rural Housing Loans
Fixed Payment Options – Permanent amortized, fixed payment may be used in the DTI if proof of payment is fixed, the rate is fixed and the repayment term is fixed.
Non-Fixed Payment Option – The GREATER of .50% of the student loan balance or the actual payment reflected on the credit report must be used as the monthly payment.
Payments for deferred loans, Income-Based Repayment (IBR), Graduated, Adjustable, and other types of repayment agreements that are not fixed cannot be used in the total debt ratio calculation.

 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

http://www.nmlsconsumeraccess.org/
If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.
Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

FHA’s New Student Loan Rule Could Impact Mortgage Borrowers


via FHA’s New Student Loan Rule Could Impact Mortgage Borrowers

 

Student Loan Payment Calculations
Fannie
  • If a monthly payment is on the credit report, the lender may use that amount for qualifying purposes.
  • If a monthly payment is on the credit report is incorrect, the lender may use the monthly payment on the most recent student loan statement
  • If the monthly payment on the credit report is zero, the lender must use one of the following options to calculate the payment for qualifying purposes
  1. Document the borrower is on an income driven payment plan and the actual monthly payment is zero
  2.  Use 1% of the outstanding student loan balance as the monthly payment
  3. Calculate a fully amortized payment using documented loan repayment terms
FHA
Regardless of the payment status (currently in payment or deferred), the lender must use either:
  • The greater of:
  1. 1% of the outstanding balance; or
  2. The monthly payment reported on the credit; or
  •  Calculate a fully amortized payment using documented loan repayment terms
RHS
Regardless of the payment amount reporting on the credit, the lender must include the payment as follows:
  • A permanent amortized, fixed payment may be used in the debt ratio when the lender retains documentation to verify the payment is fixed, the interest rate is fixed, and the repayment term is fixed.
  • Payments for deferred loans, Income Based Repayment (IBR), Graduated, Adjustable, and other types of repayment agreements which are not fixed cannot be used in the total debt ratio calculation. One percent of the loan balance reflected on the credit report must be used as the monthly payment. No additional documentation is required.
VA
  • If the borrower can document the student loan will be deferred 12 months from the closing date, the monthly payment does not need to be considered
  • If a student loan is in repayment or scheduled to begin repayment within 12 months from the closing date, the threshold payment amount must be calculated by  using 5% of the loan balance divided by 12 months
  • If the payment reporting on the credit report is greater than the threshold payment calculation amount, then the credit report payment must be used for ratios.
  • If the payment reporting on the credit report is less than the threshold payment calculation and the lender is using the lower payment to qualify the borrower then:
  1. A statement from the student loan servicer reflecting the actual loan terms and payment information must be included in the file.
  2. The statement must be dated within 60 days of closing
  3. It is the underwriter’s discretion to use the lower payment