Student Loan Changes
As of April 2025, both Fannie Mae and Freddie Mac have updated their guidelines regarding how student loan debt is factored into mortgage underwriting, impacting borrowers' debt-to-income (DTI) ratios.
Fannie Mae Student Loan Guidelines
Income-Driven Repayment (IDR) Plans: If you're on an IDR plan and your monthly payment is $0, lenders can use this $0 payment in your DTI calculation, provided it's properly documented.
Deferred or Forbearance Status: For loans in deferment or forbearance, or when the monthly payment isn't listed on your credit report, lenders are required to use either:
1% of the outstanding loan balance, or
A calculated payment based on the loan's repayment terms.
Near-Term Loan Forgiveness: If your student loans are set to be forgiven within 10 months, and you can provide documentation confirming this, lenders may exclude these loans from your DTI ratio.
Freddie Mac Student Loan Guidelines
Income-Driven Repayment (IDR) Plans: Similar to Fannie Mae, if your IDR plan results in a $0 monthly payment, lenders can use this amount in your DTI calculation, with appropriate documentation.
Deferred or Forbearance Status: For loans in deferment or forbearance, or when the monthly payment isn't available, lenders should use:
0.5% of the outstanding loan balance.
Near-Term Loan Forgiveness: As with Fannie Mae, if your student loans will be forgiven within 10 months and you can provide the necessary documentation, these loans may be excluded from your DTI ratio.
These updates aim to provide a more accurate assessment of a borrower's financial obligations, especially for those on income-driven repayment plans or with loans nearing forgiveness.
If you need assistance calculating your DTI or understanding how these guidelines apply to your specific situation, feel free to ask!
