Help! Student Loan Debt Considered for FHA & 203k loan

20 Replies

Recently, spoke with mortgage broke to attempt to qualify for my first MFR to 'househack'/rent.

I provided him my general background:
Have 140k student loan debt
37 k annual salary
Credit score of 700+

He said that with the new rule of considering student loan debt I would not qualify for a mortgage because of him having to consider the payment. I told him I wanted to use the FHA loan to fund a rehab property under 80k and then get a 203k loan for rehab work.

I'm truly getting discouraged because of it's not one thing it's another. If is not your DTI is too high, now it's student loan debt.

Can some advise if he is correct or if their are other loan avenues or lenders I can consider?

He is correct. Additionally, you would not be able to get 2 FHA loans simultaneously for the same property.

@Charlie Fitzgerald So you can't get an FHA loan and a 203k loan for repairs? I was told otherwise. Also, what are you referring to he is correct about?

I don't know how new the rule is....Student Loan debt has counted toward DTI- It's a monthly payment you MUST make so it makes sense it would be included.

I don't believe you can utilize both loans stacked in that manor. But- You'll have to get the DTI under 45% maybeeee 47% for some cases before any loan will really work.

You may be on the hard money end until then. Or need to pickup a second job. 

Do you work in a field that will qualify for any debt forgiveness? I'm guessing your monthly payment has to land close to $800 with that amount? So that alone accounts for 25% DTI. Can you aggressively pay down the other debts that are getting you over the 45?

@Ashley Sanchez

First off a 203k loan is an FHA loan. FHA has a wide range of loans from your standard FHA loan, 203K, reverse mortgage and streamlines.

Second if you're going to buy a 2-4 unit home did your broker include future rents in the calculation?

FHA will calculate 1% of student debt so in your case that's really high compared to your income. $1,400 a month and you make $3,083 So right off the bat your DTI is 45.4%. With your fico score you'll be able to go to around 52% (maybe more but unlikely because of the type of loan you're applying for)

Hopefully you don't have a car payment, c.c. or any personal loans because that might push your DTI over the top.

You're going to need to provide market rents for me to finish off this very quick and basic analysis. But let's say you buy a 4 plex for 100K and the rents in the other three units are $400 a pop. That's an additional $1,200 in rents and with FHA you can use 85% of leases towards your income. So now you have $1,020 more dollars towards your income and now you're making $4,103 a month instead of $3,083 a month. Multiply $4,103 x 52% =$2,133.56 - $1,400 = $733.56

This now means that you can get a home with a mortgage payment of $733.56 or less.

That's approximately 90K - 100K

This is a lot and it's complicated so you need to find someone who knows what they're doing and work with them to find a resolution.

NEVER GIVE UP!!!

That's exactly what I did. I was approved for a FHA loan with a 203k for rehab. It was approved because my loans were in deferment. That might make a difference if you haven't tried it already.

@Natalie Kolodij I wish I did work in a field for loan forgiveness ,but I dont😏 When I calculated my DTI a month ago with my household expenses I was at 49%.
My student loans ARE NOT deferred but I am on an income based plan. I consolidated about 5-6 years ago. Between both loans, I pay $375/month.

I am working on paying down my small credit card debt. I do have a second job but it not enough supplemental income for me to count.

Geez I swear I would've went to school had I knew the housing market would have been this way.

I want to do a buy and hold as my first property to also live in and get out the apartment living with rising rents. So getting a hard money loan wouldn't work for my initial situation.

Thanks for your information!

@Shaun Weekes Thanks for your analysis! The monthly payment you calculated is around about my extreme max I wanted to afford.

Currently I do not have any additional debt such as car payment or personal loan. Thanks god🙏🏾 I couldn't afford to create anything else.

Please PM me so we can connect and talk more to help me figure out what I can do realistically! I must admit. You have done more for me that the three mortgage brokers I have talked to. Two of them never even called back. Smh.

Looking forward to hearing from you!

Originally posted by @Ashley Sanchez :

Natalie Kolodij I wish I did work in a field for loan forgiveness ,but I dont😏 When I calculated my DTI a month ago with my household expenses I was at 49%.
My student loans ARE NOT deferred but I am on an income based plan. I consolidated about 5-6 years ago. Between both loans, I pay $375/month.

I am working on paying down my small credit card debt. I do have a second job but it not enough supplemental income for me to count.

Geez I swear I would've went to school had I knew the housing market would have been this way.

I want to do a buy and hold as my first property to also live in and get out the apartment living with rising rents. So getting a hard money loan wouldn't work for my initial situation.

Thanks for your information!

Oh girl, I know the feeling with real estate/ student loans/ housing market/ job market. If I would have known at 18 what I know now there's a chance I'd have skipped college. If it makes you feel better my roommate has 100k in loans and has an acting degree...so....we all make choices :) 

Are you over the 45% per your calculation or the lenders? It shouldn't really include household expenses for the DTI.

375+ CC Payment+ car loan if applicable 

1386= 45% of your gross at 3080 

1386- 375-50?(CC payment) = $961 for a mortgage? That's tough but not insane.  

Just layout a plan to get to the numbers you need. That's basically what I had to do.  A strict budget, a timeline, and realize it wasn't able to happen right when I wanted- but 12 months later I'm now really close. 

@Natalie Kolodij My DTI was based upon my calculation at 49%.

I have no car loan and my cc payment is $125..So i just balance transferred and following my strict payment plan to rid myself of it.

Part of my DTI would be taken up by student loan payment. I have 145k so I'm right with her😏😏

I had to put myself on a FRUGAL FRUGAL budget. Not easy when you are not making much.

Thanks for your help!

But your student loan payment is $375 right? 

3080 gross monthly= 45% = $1,386

$1,386 - 375-125= $886 Monthly mortgage 

I'm not super familiar with your market but I feel like Georgia has some duplexes available for around $100k?

Try Lending Home.com I can also send you the person I dealt with and I have student loans. There are lenders out there that doesn't look at credit/loans.

So if you are activily attending school I am under the understanding that you dont have any payments.  Might be worth looing into taking a class so you can defer your payments for a little while?

@Alan Russell You have to be actively pursuing the degree that the loans are for. If she's finished that she couldn't go back now and have it deferred. 

@Natalie Kolodij Yes they are about $370! Yes there are but I'm trying to get a cheap cheap one and rehab it. Better bang for the buck.

@Bianca Harrison Okay send me a PM! I don't mind doing them but hard money lenders charge high interest bc they are more for fix and flips than buy and hold.
There are several duplexes on MLS. Better to find investors to partner with because they can sell you ones not on MLS.

@Ashley Sanchez Don't give up!!! Keep pushing.  Maybe you can find a duplex that doesn't need much work and the owner will finance!!!

Originally posted by @Ashley Sanchez :

Recently, spoke with mortgage broke to attempt to qualify for my first MFR to 'househack'/rent.

I provided him my general background:
Have 140k student loan debt
37 k annual salary
Credit score of 700+

He said that with the new rule of considering student loan debt I would not qualify for a mortgage because of him having to consider the payment. I told him I wanted to use the FHA loan to fund a rehab property under 80k and then get a 203k loan for rehab work.

I'm truly getting discouraged because of it's not one thing it's another. If is not your DTI is too high, now it's student loan debt.

Can some advise if he is correct or if their are other loan avenues or lenders I can consider?

 A $37,000 salary and $140,000 student loan (who knows what total debt is), will very likely always cause problems due to a high debt to income ratio.

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