USDA announced some clarification on existing guidelines as well as adding some new guidelines; all of which are effective with new USDA Home Loan Applications the summer of 2016. The USDA Home Loan Guideline changes that we receive the most questions about are the ones regarding the way USDA Loans NC look at Student Loan Debt – however, there are several other significant changes as well.
USDA Home Loans NC may well be the best mortgage program available for those who are able to meet the income restrictions, and are interested in living in a more rural area of NC. The program offers some of the best mortgage rates, and has very low monthly “PMI” Factors, which are scheduled to go lower in October of 2016.
Because of that, the payments – and therefore the ability to qualify for a slightly bigger home, makes the USDA Home Loan NC a very popular program. It does have it’s “quirks” and so I’ve tried to highlight some of the USDA Loan Guideline changes the Summer of 2016.
USDA Loans NC and Student Loan Guidelines
Most mortgage programs require us to count some form of Student Loan debt in our qualifying Debt to Income ratios. USDA Home Loan NC underwriters are the most diligent, and require that we prove that the payment is actually a fixed rate mortgage payment.
Effective March 9, 2016 the USDA Student Loan Guidelines state that we must calculate qualifications as follows:
“Include the greater of 1% of the outstanding loan balance or the verified fixed payment reflected on the credit report. Income based repayment plans (IBR), graduated repayment plans, adjustable, interest only are all subject to change & the lender must use 1% of the outstanding loan balance as the payment amount.”
Many Loan Officers do not realize this is the case – because of that, borrowers are being told they qualify for a USDA Home Loan, when in fact they don’t. If your student loan payment is in deferment right this minute (and you are applying for a mortgage) we are required to count 1% of the balance.
To learn more or if you have any questions, Please call us Call Toll-free : (866) 591-2769