FHA eases path to homeownership for borrowers with student loan debt
Who is FHA ?
The Federal Housing Administration, generally known as “FHA”, provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family homes, multifamily properties, residential care facilities, and hospitals. It is one of the largest insurers of mortgages in the world, insuring more than 46 million mortgages since its inception in 1934.
Loans must meet certain requirements established by FHA to qualify for insurance.
What does this mean for you?
If you are a homebuyer who qualifies for a FHA loan that allows you to make a down payment as low as 3.5%, but couldn’t qualify because of student loan payments, we can help. Before this announcement FHA required lenders to calculate student loan debt using 1% of a borrower’s student loan balance for student loans that are not fully amortizing or are not in repayment. After this announcement FHA allows lenders to calculate a borrower’s student loan payment using only 0.5% of the student loan balance for student loans that are not fully amortizing or are not in repayment. This could allow a borrower to qualify for a higher purchase price than prior to FHA’s announcement on 06/16/2021.