Student Loans and Mortgage
When you apply for a mortgage to buy a house, lenders evaluate your ability to repay the loan by calculating your debt-to-income ratio (DTI). This ratio compares your monthly debt payments to your monthly income. Lenders use this calculation to determine how much mortgage debt you can afford to take on.
If you have student loans that are in deferment, meaning you are not currently making payments on them, they will still count towards your debt-to-income ratio. This is because even though you are not making payments, you still owe that money and it will eventually come due. So, lenders consider the total amount of your student loan debt, including those that are in deferment, when calculating your DTI.
In addition, lenders may also consider the likelihood that your student loans will come out of deferment and require payments while you're making mortgage payments. They do this to ensure that you can afford both payments without defaulting on either loan.
So, even if you're not currently making payments on your student loans, they will still be factored into your debt-to-income ratio when you apply for a mortgage. It's important to keep this in mind when planning to buy a house and to make sure you can afford both your mortgage and your student loan payments, including those that are currently in deferment.
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.