Fannie Mae made a change that will substantially help those who have student loans qualify for a mortgage. Previously, 1% of the loan balance counted against the borrower (e.g., $50,000 in student loans = $500 for monthly debt).
This rule applied despite some people having income-based repayment plans, or other plans that yielded much lower monthly payments than 1%.
With this new Fannie Mae release, we can now use the payment reflected on the credit report, which is usually much lower than the 1% calculation.
What does this mean to you?
- If you were unapproved because of student loans, it’s possible you may be able to get approved now,
- If you were approved but wanted to be approved for more, that may now be possible,
- Real estate agents should consider revisiting clients who may have been previously denied due to student loans.
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