How Are Student Loans Counted in Your Mortgage Debt-to-Income Ratio?

Student loans can have a major impact on your ability to qualify for a mortgage—even if you’re not currently making payments. Whether you’re on a $0 income-based repayment plan or your loans are deferred, lenders still have to account for your student loan debt when calculating your Debt-to-Income (DTI) ratio.

Here’s a breakdown of how student loans are treated in DTI calculations across major loan programs—and why it matters for your homebuying power.

1. Deferred Student Loans

If your loans are in deferment, they’re not ignored. Here’s how different loan types calculate the monthly obligation:

  • Fannie Mae (Conventional): Uses the actual documented payment, or if none is provided, 1% of the loan balance.
  • Freddie Mac (Conventional): Uses 0.5% of the outstanding loan balance, regardless of deferment status.
  • FHA Loans: Uses 0.5% of the loan balance unless a fully amortizing monthly payment is documented.
  • VA Loans: If loans are deferred for more than 12 months after closing, no payment is counted. If deferred less than 12 months, 0.5% of the balance is used.

Important Note: If a monthly payment is listed on your credit report, and it’s higher than what the guidelines would otherwise require, lenders are required to use that higher reported amount in your DTI—even if the loan is deferred or on an IBR plan.

Example: Deferred Loan of $50,000

Loan Type   Monthly DTI Calculation
Fannie Mae   $500 (1% of $50,000)
Freddie Mac   $250 (0.5% of $50,000)
FHA   $250 (0.5% of $50,000)
VA (Deferred >12 mo)   $0
VA (Deferred <12 mo)   $250 (0.5% of $50,000)

Bottom Line: Just because you’re not paying your loans now doesn’t mean the lender won’t account for them. The program you choose—and what’s on your credit report—can have a big impact.

Student Loans

2. Income-Based Repayment (IBR) Plans

If you’re on an Income-Based Repayment (IBR), PAYE, or REPAYE plan, you might have a very low monthly payment—or even $0. How this is treated depends on the loan type.

  • Fannie Mae: Allows the actual documented IBR payment, even if it’s $0, as long as the payment is not temporary.
  • Freddie Mac: Same as Fannie—actual payment may be used, provided it’s verified and ongoing.
  • FHA: Does not accept $0 payments. Lenders must use 0.5% of the balance or the reported payment for for DTI purposes.
  • VA: Allows actual payment, even if $0, as long as it’s documented and not expected to increase in the next 12 months.

Reminder: If the credit report lists a higher monthly payment than what the loan program allows or you’ve documented, the credit report payment must be used in your DTI calculation.

Example: IBR Payment on $50,000 Balance

Loan Type   Payment Used If Actual = $75/mo   Payment Used If Actual = $0/mo
Fannie Mae   $75   $0
Freddie Mac   $75   $0
FHA   $75   $250 (0.5% of $50,000)
VA   $75 (if stable)   $0 (if deferred or verified stable)

Bottom Line: FHA is the most conservative. VA and conventional loans can be more accommodating—unless your credit report shows a higher required payment.

Student Loan

Why This Matters

If student loans are in your financial picture, how they’re counted in your DTI can make or break your mortgage approval—or significantly limit how much home you can buy.

That’s why it’s critical to:

  • Review your student loan payment terms
  • Understand which loan programs offer flexibility
  • Check your credit report for reported monthly payments
  • Document everything thoroughly before applying

Final Thoughts

Student loans don’t have to stand between you and homeownership—but how they’re calculated matters. Whether you’re in deferment, on a repayment plan, or just unsure how your loans affect your mortgage readiness, let’s connect.

Feel free to reach out to me at 312-296-4175 or email me at connect@borislending.com — I’d be happy to help you make your DTI calculations and guide you through the process. I lend in all 50 states and I am never too busy for your referrals!!