Do student loans effect your debt to income ratio?

If I am currently in school. When I decide to buy a house, will my student loans effect my debt to income ratio? I currently have no debt because of a bankruptcy I did a year back. Since, I'm still in school my student loans aren't due yet. Will it behoove me to get a home before I graduate, or will it not matter?

Do student loans effect your debt to income ratio?

Yes they do.

Do student loans effect your debt to income ratio?

Okay, I can answer this from my experience. If your loans are deferred, meaning you are currently in school, get a letter from your loan lender to prove it and they ARE NOT counted. Now here is the trick-I have loans, but I made sure to be in school for graduate studies when I applied. My lender letter said that my loans were deferred for an anticipated 5 year period (they usually indicate a period of deferrment a tad bit longer than your anticipated matriculation period). A friend of mine was FINISHING up her masters degree, so her letter ended up showing that she was only deferred for one more year. The one year mark is questionable. So make sure that your letter shows deferrment for longer than 12 months, otherwise lenders may consider that to be debt in the very near future. It must be clear that your loans will not be due in a very long time and will not impact your current finances. Also, DO NOT ask your student loan lender for a letter for the purpose of buying a home, tell them you want a letter for your records. After you graduate they are factored in like all other debt. You come out better enrolling in a state graduate program, even if you don't plan to continue, just for the deferrment letter!

I hope this helps!

Do student loans effect your debt to income ratio?

Yes, they will affect your DTI.

My advice to you, is wait 4 years after the bankruptcy and have a PERFECT, re-estabished credit before you apply for a home loan.

Filing for a BK 1 year ago puts you in an extremely high risk group and you will be given the highest rates possible...that is not a smart financial decision.

You also don't need to be purchasing a house until you know exactly how the loan payments is going to affect your overall budget.

A common mistake students make is they think that if they are in deferment, that they don't count in a DTI ratio...and that is not true...b/c a deferment is only good for 12 months, so since the payment is eventually going to have to be made, the underwriter will calculate a payment to use.

PS: Teacher Gal is incorrect. If no payment is listed on the credit report, the underwriter will calculate 1 to 2% of the loan amount and uses that for a monthly payment to use in the DTI....that is STANDARD Fannie Mae/Freddie Mac underwriting guidelines.

If you use %26quot;Teacher Gal's%26quot; method, all it does it set you up for foreclosure and it's borderline loan fraud.

Do student loans effect your debt to income ratio?

Your student loans DO count as a part of your debt burden, even if they are currently in deferment. If you apply for a loan, the lender will take 1.5% to 2% of your student loan balance(s) and use that as a monthly payment. Just because you don't have to pay now does not mean it won't count: it is still a financial obligation you must meet.

I'd be more concerned about a bankruptcy that was discharged less than four years ago: it will be hard to get a good rate. Most prime lenders require a bk be discharged for two to four years, depending on the underwriting/decisioning tool they use, such as Fannie Mae or DU/AU.

Mary B also pointed out a very good issue: Teacher Gal gave you awful advice that is borderline fraud, and is really quite foolish because any underwriter who reviews your file will realize that if you have student loans, you will have to pay them back, even if you had a grace period that lasted for years or were in a program whereby you did not have to pay the loan back if you reinvested in the community (some loans/grants are set up that way for people who work in fields such as medicine).

Don't try to get a house if you are not working full time and are making the money you need to for the area that you (will) live in. You are setting yourself up for failure. I waited nearly five years before I got my house. I paid off my student loans and got my credit together. And although I did a no-money down program (I temporarily wiped out all of my savings to pay off debt), it was for a house that was a hec of a lot less than what I actually qualified for. I also got a standard fixed rate mortgage; those ARMs are bad news.

Do student loans effect your debt to income ratio?

If you have an income while you are in school, then yes possibly it would benefit you to get qualified to buy a home before you graduate. This is mostly only true if you do not have have good job potential once you graduate. If you have great prospects, than your income to deb ratio may look awesome after graduation.

Besides, it would be very short minded of you to take on a responsibility of a house - when you have loans coming due that would impair your ability to buy the house in the first place. If the loans are that bad that they would cause concern about your income to debt ratios, then you probably shouldn't be looking to buy right now.

Do student loans effect your debt to income ratio?

I use to sites for all my loan info I find them very helpful and hopefully they can help you out.

http://www.loansurf.info

http://www.loanunblock.info