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I am the author of this blog and also a top-producing Loan Officer and CEO of InstaMortgage Inc, the fastest-growing mortgage company in America. All the advice is based on my experience of helping thousands of homebuyers and homeowners. We are a mortgage company and will help you with all your mortgage needs. Unlike lead generation websites, we do not sell your information to multiple lenders or third-party companies.


A recent announcement by Housing and Urban Development (HUD) has made qualifying for FHA loans easier for borrowers with Student Loans.

The debt to income ratio plays an important role in qualifying for any mortgage including FHA loans. It’s the ratio of your monthly obligation towards debts vs your monthly qualifying income.


Earlier student loan payment was calculated as follows:

either the greater of 1 percent of the outstanding balance on the loan; or the monthly payment reported on the Borrower’s credit report; or the actual documented payment, provided the payment will fully amortize the loan over its term.

So, if you had a $20,000 loan balance on your deferred student loans, your monthly debt obligation was calculated as 1% of that = $200.

After (effective now):

For outstanding Student Loans, regardless of payment status, the loan payment will be calculated as follows:

the payment amount reported on the credit report or the actual documented payment, when the payment amount is above zero; or  0.5 percent of the outstanding loan balance, when the monthly payment reported on the Borrower’s credit report is zero.

So, now if you have a $20,000 loan balance on your deferred student loans, your monthly debt obligation will be calculated as 0.5% of that = $100.

That spares an extra $100 towards housing payment that will qualify for a much bigger FHA loan and help you buy a home with a higher purchase price.

Additionally, if the student loan is forgiven, canceled, or discharged, the payment can be completely waived for qualifying for an FHA loan.

According to the press release by HUD – This announcement enhances FHA’s ability to serve one of its core demographics—first-time homebuyers. Over 80 percent of FHA-insured mortgages are for first-time homebuyers on average each year. FHA estimates that more than 45 percent of these borrowers also have student loan debt, with much of this debt impacting people of color.

“Too many generations of Black families are locked out of the opportunity to get an affordable mortgage, own their own home, and build wealth to pass on to their children and grandchildren, I commend HUD and Secretary Fudge for taking this first step to address inequities in our housing system and look forward to continuing to work together to increase access to homeownership and address disparities.”  said U.S. Senator Sherrod Brown, Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs