Student debt isn’t going anywhere any time soon. Statistics show that 21% of employed adults between the ages of 25 and 39 with at least a bachelor’s degree and outstanding student loans work more than one job, and just 27% of young college graduates with student loans say they are living comfortably, compared to 45% of college graduates of a similar age without outstanding loans. And today, only 51% of Millennial college graduates with student loans say that the lifetime financial benefits of their degree outweigh the costs.
These statistics continue thwarting people with decent incomes from qualifying for mortgages.
For example: Student loan debts of $100,000 or more are common, and $200,000 is common for married couples. A couple might have a combined income exceeding $150,000 per year and still not qualify for a mortgage due to the DTI ratio — not when combined monthly student loan payments are running $2,500 or even $3,000.
We work with our lender partners on a daily basis to improve mortgage qualifications for our borrowers with student debt.
It is a common practice to calculate monthly payments as a percentage of an outstanding loan.
Say, if you are enrolled in an income-based repayment plan, the lower monthly payment can be used when calculating your debt-to-income ratio. This can result in the monthly payment calculation dropping from thousands each month to $600 or less.
But if any adjustments with the qualification criteria will be made, it is bound to help millions of home buyers.
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Adopted from: Benzinga