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USDA Guidelines on Student Loans

March 18th, 2022 by chelseagardner

USDA Guidelines on Student Loans

USDA Guidelines on Student Loans in Texas, Tennessee, Florida and Alabama

Student loan debt can have a major impact on qualifying for a mortgage. Understanding the USDA guidelines on student loans can mean the difference between homeownership and a missed opportunity.

Don’t forget to download our USDA Blueprint for Success with the link below.  This free guide is designed to walk you through the USDA loan process and is a great resource for homebuyers and Realtors alike.

 

Student Loan Debt

USDA Guidelines in Florida, Texas, Alabama, and Tennessee

Qualifying to buy a home with student loan debt is becoming a bigger challenge, and it is not just an issue for first-time home buyers.

Recent data shows that a staggering 42.8 million borrowers have over $1.64 trillion in student loan debt. Knowing the guidelines surrounding student loan debt can open opportunities for a USDA loan.

The USDA student loan guidelines have improved over the years by reducing the amount needed for qualifying on specific student loans. This will help increase your overall budget and price range.

 

Fixed-Rate Student Loans

A fixed-rate loan has an interest rate that remains the same for the life of the loan.

For fixed payment loans, “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. The fixed payment will fully amortize/pay in full the debt at the end of the term.”

Non-Fixed Rate Student Loans

USDA Student Loan Debt Qualification

A non-fixed rate loan has a variable interest rate that varies as market interest rates change.

For non-fixed loans, “payments for deferred loans, Income-Based Repayment (IBR), Income-Contingent (IC), Graduated, Adjustable, and other types of repayment agreements which are not fixed must use the greater of the following:

  1. One half (.50) percent of the outstanding loan balance documented on the credit report or creditor verification, or
  2. The current documented payment under the approved repayment plan with the creditor.”

Unlike the previous USDA guidelines which required taking a full one percent (1%) of the balance on non-fixed payment loans, current USDA student loan guidelines have improved by reducing the minimum payment to one-half percent (.50%) of the balance.

Additional USDA Student Loan Guidelines

  • Student loans in the applicant’s name alone but paid by another party remain the legal responsibility of the applicant. The applicable payment must be included in the monthly debts.
  • Student loans in a “forgiveness” plan remain the legal responsibility of the applicant until they are released of liability from the creditor. The applicable payment must be included in the monthly debts

As a USDA and VA Approved Lender in Florida, Tennessee, Alabama, and Texas, let our experience and expertise go to work for you!

Just call, email, or text to discuss your scenario and let us show you the “Metroplex” difference!

 Toll Free: (800) 806-9836 X 280

Call/Text: (863) 451-3032
SeanS@MPLX.org

Don’t forget to download our USDA Blueprint for Success with the link below:

Usda Blueprint for Success

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