October 16, 2019

Vimeo Channel YouTube Channel

FHA Loans and Student Loan Deferments

A reader asks, “If applying for FHA and student loans are in deferment until after the closing date, does it have to show a year after the first payment is due? For example, if the payment is due July 1, 2012 does it have to show July 15, 2012 or later?”

This question is addressed in the FHA loan rules spelled out in HUD 4155.1, Chapter 4 Section C. It’s covered in the section titled, “Borrower Liabilities: Projected Obligations and Obligations Not Considered Debt” and includes a list of things the FHA does not consider debt for the purposes of calculating a borrower’s debt-to-income ratio for an FHA home loan.

Student loans are specifically addressed in this section, which states, “Debt payments such as a student loan or balloon note scheduled to begin or come due within 12 months of the mortgage loan closing must be included by the lender as anticipated monthly obligations during the underwriting analysis.”

But the rules also add, “Debt payments do not have to be classified as projected obligations if the borrower provides written evidence that the debt will be deferred to a period outside the 12-month timeframe.”

If a borrower has a student loan which has been deferred, it may or may not qualify to be excluded from the debt to income ratio calculation based on when it becomes due according to FHA policy. Will the lender’s individual policy vary from this? Could a lender require the debt to be included anyway based on the due date? It’s possible–but your experiences may vary depending on which lender you are working with.

FHA loan rules also have a list of other financial obligations and circumstances which do not have to be included in the debt to income ratio. The FHA lists them in the rule book as follows:

“Obligations not considered debt, and therefore not subtracted from gross income, include

Joe Wallace - Staff Writer

By Joe Wallace

May 31, 2012

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

Connect with Joe:

 

Browse by Date:

About FHANewsBlog.com
FHANewsBlog.com was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

5850 San Felipe Suite #500, Houston, TX 77057 281-398-6111.
FHANewsBlog.com is privately funded and is not a government agency.

Share This