+2 votes
asked in Mortgage by
Can switching to an extended payment plan with student loans help with DTI vs using the 1% with a graduated payment or IBR plan? Will underwrites allow this change?

2 Answers

+1 vote
answered by (23.2k points)



Thank you for reaching out to us. To answer your question, yes, switching to an extended payment plan for your student loan will help with debt to income. Typically it will lower the amount to .5% versus 1%. That is the general rule of thumb. Of course not every scenario will line up with that amount. The caveat is, you must enter the fully amortized FIXED extended payment plan. This must be a fixed payment, meeting each installment payment will pay the loan off in full. Typically this is extended over 25 years. If you are on an IBR repayment plan, you may qualify for a conventional mortgage. What state are you looking to purchase a home in? We are experts in student loan guidelines. Please call me directly on 630-659-7644 for more information!

+1 vote
answered by (3.2k points)
Setting up a fully amortized payment for student loans will help with the debt to income ratio vs using the 1%, this can be used by FHA or Fannie Mae.

The graduated payment or IBR plan will only be an acceptable proof of required payment for Fannie Mae.

It really depends on the program that meets your overall requirements.  It also depends on the lender you are obtaining financing with, it could be they have overlays.

I am part of Gustan Cho's team, we have NO lender overlays.

If you need any other information or have additional questions feel free to contact me:

 Maria Windham  # 813-352-7523  maria@loancabin.com
commented by (40.8k points)
NON-QM loans allow deferred student loans to be exempt from debt to income ratios