🎓 What You Should Know About Student Loans Before You Buy a Home or Refinance

Student loans can help or hurt your mortgage approval — and in some cases, they can stop the process entirely. Different loan programs treat student loan debt differently, which means the type of mortgage you choose matters more than most borrowers realize.

Here’s a clean breakdown of how FHA, VA, USDA, and Conventional loans look at student loans.

🚫 First: Are You in Default?

If you’re defaulting on a government‑backed student loan, you cannot get:

• FHA
• VA
• USDA

You may still qualify for a Conventional mortgage depending on the lender and specific circumstances.

⏳ Deferred Student Loans

How deferred loans are treated:

VA Loans

If your student loan is deferred for at least 12 months from closing, VA will exclude the payment from your debt‑to‑income ratio. This can dramatically increase how much home you qualify for.

FHA, USDA & Conventional

Even if your loans are deferred, these programs still count a payment against you.

📊 How Each Loan Program Calculates Student Loan Payments

FHA & USDA

They will use:

• The payment on your credit report (must be above $0), or
• Your income‑based repayment (IBR) payment (must be above $0), or
• 0.50% of the loan balance

VA

VA uses:

• 5% of the loan balance ÷ 12 months

This often results in a lower calculated payment than other programs.

Conventional Loans

Conventional splits into Fannie Mae and Freddie Mac:

Fannie Mae

Uses:

• Your IBR payment — even if it’s $0, or
• 1% of the balance

Freddie Mac

Uses:

• The payment on your credit report, or
• 0.50% of the balance Whichever is greater

🧮 Why This Matters

Depending on the program:

• Your student loan payment could lower your buying power
• It could push your debt‑to‑income ratio too high
• It could stop your mortgage approval altogether

This is why borrowers with student loans need a lender who understands higher DTI allowances and flexible underwriting, like Barclay Butler Financial Inc.

📞 Have Student Loans and Want to Buy or Refinance?

Barclay Butler Financial Inc.
📞 Call or text: 224‑420‑9990
📧 Email: bbutler@barclaybutlerfinancial.com

📍 Licensed States

California, Florida, Georgia, Illinois, North Carolina, South Carolina, Tennessee

📞 Contact Us

• Call/Text: 224-420-9990

• Email: bbutler@barclaybutlerfinancial.com

• Contact: Barclay Butler

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