On this page
- How lenders calculate student loan payments by loan type
- How Fannie Mae and Freddie Mac calculate student loan payments
- How FHA and USDA calculate student loan payments
- Can a VA loan leave out a deferred student loan?
- Example: how each program would calculate student loan payments
- What changed for income-driven repayment in 2026?
- How to lower the student loan payment a lender counts
- FAQ
- What to do next
The question: How do mortgage lenders calculate student loan payments when the credit report shows a $0 income-driven payment, a deferment, or a payment lower than the lender’s number?
The short answer: Lenders calculate student loan payments from your credit report or loan statement when that payment is above $0. When the payment is $0, deferred or in forbearance, each loan program uses its own formula. Fannie Mae can accept a documented $0 income-driven payment, while Freddie Mac, FHA and USDA count 0.5% of the balance. VA counts 5% of the balance divided by 12 unless the loan is deferred at least 12 months past closing.
How lenders calculate student loan payments by loan type
Each program’s guide sets the rule. A lender may add a stricter overlay, so treat this table as the floor and ask which payment it will use.
| Loan type | Report shows a payment above $0 | Report shows $0 (income-driven plan) | Deferred or in forbearance | Source |
|---|---|---|---|---|
| Fannie Mae (conventional) | Reported payment, or the latest statement’s payment if the report is wrong | $0, if documents verify it | 1% of the balance, or a fully amortizing payment from the documented terms | Selling Guide B3-6-05 |
| Freddie Mac (conventional) | Reported payment, unless documents support a different payment above $0 | 0.5% of the balance, unless documents support a payment above $0 | 0.5% of the balance when the report shows $0 | Guide 5401.2(b) |
| FHA | Reported or documented actual payment | 0.5% of the balance | 0.5% of the balance when the report shows $0 | HUD 4000.1 II.A.4.b.iv(H) and II.A.5.a.iv(G) |
| VA | Reported payment, if above 5% of the balance divided by 12 | 5% of the balance divided by 12, unless a servicer statement supports a lower payment | Excluded if deferred at least 12 months past closing; otherwise 5% divided by 12 | Pamphlet 26-7, chapter 4, topic 5 |
| USDA | Reported or documented actual payment | 0.5% of the balance | 0.5% of the balance when the payment is $0 | HB-1-3555, chapter 11, 11.2 B |
So the formula mostly matters when the reported payment is $0 or missing. There are two exceptions: VA checks every payment against its minimum, and Freddie Mac can raise a payment above $0 when an income-driven plan is about to recertify or rise.
How Fannie Mae and Freddie Mac calculate student loan payments
Conventional loans split into two rule sets because Fannie Mae and Freddie Mac each publish their own guide. Your lender knows which one your loan will follow. If it doesn’t say, ask, because the student loan math differs.
Fannie Mae student loan calculation
Fannie Mae’s Selling Guide, section B3-6-05 is the most flexible of the five on $0 payments. If you are on an income-driven repayment plan and documents verify a $0 payment, the lender may qualify you with $0.
For a deferred loan or one in forbearance, however, the lender must count something. It can use 1% of the outstanding balance, even if that is lower than the real payment. Alternatively, it can calculate a fully amortizing payment from your documented repayment terms.
Fannie Mae also lets a lender exclude a student loan that someone else pays, such as a parent. In that case, the lender needs the other party’s canceled checks or bank statements for the most recent 12 months, with no late payments.
Freddie Mac student loan calculation
Freddie Mac’s Guide, section 5401.2, says that in all cases the lender must count an amount greater than $0. When the report shows $0, the lender uses 0.5% of the balance, unless documents support a different payment above $0.
Freddie Mac also looks ahead. If your income-driven plan must recertify on or before your first mortgage payment, or your payment will rise, the lender must use one of three amounts instead:
- The greater of your current payment or 0.5% of the balance
- The documented future payment, if it is higher than today’s payment
- A future payment at or below today’s, once your recertification is approved (it still must be above $0)
In addition, Freddie Mac can leave a loan out when the file documents that you are approved for a forgiveness or discharge program and either 10 or fewer payments remain or the loan is deferred and will be forgiven at the end of the deferment.
How FHA and USDA calculate student loan payments
FHA and USDA use nearly the same rule. Both count the reported payment, or the actual documented payment, when it is above $0. When the payment is $0, both use 0.5% of the outstanding balance, whatever the loan’s status.
Under HUD Handbook 4000.1, the lender needs written proof from the servicer, creditor or loan program if it counts less than the reported payment. That proof shows the actual payment, the payment status, the balance and the terms. We read Update 18, issued August 12, 2026; its student loan wording is in II.A.4.b.iv(H) for loans scored with TOTAL Scorecard and II.A.5.a.iv(G) for manual files.
FHA can also drop the payment entirely once the student loan program, creditor or servicer documents that the balance was forgiven, canceled, discharged or otherwise paid in full. USDA is stricter here. HB-1-3555, chapter 11 says a loan in a forgiveness program still counts until the creditor releases you. Likewise, USDA still counts a student loan that another person pays.
Can a VA loan leave out a deferred student loan?
Yes. Only VA lets a lender leave out a deferred loan just because the deferment runs long enough. Freddie Mac can also leave one out, but only when the loan is headed for forgiveness. VA Pamphlet 26-7, chapter 4 says: “If the borrower(s) provides written evidence that the student loan debt will be deferred at least 12 months beyond the date of closing, a monthly payment does not need to be considered.”
If the loan is in repayment, or repayment starts within 12 months of closing, VA sets a threshold. The lender multiplies each loan’s balance by 5%, then divides by 12. For example, a $30,000 balance gives a threshold of $125 a month ($30,000 × 5% = $1,500; $1,500 ÷ 12 = $125).
Next, the lender compares that threshold with the reported payment:
- If the reported payment is higher, the lender must use the reported payment.
- If the reported payment is lower, the lender can count it only with a servicer statement showing the loan terms and payment.
That statement must be dated within 60 days of closing. A printout from the servicer’s website works. The pamphlet does not say whether a servicer statement showing a $0 income-driven payment is enough, so ask the lender before you apply.
Example: how each program would calculate student loan payments
Say a buyer owes $40,000 on one federal student loan (an example balance). The table shows how each program would calculate student loan payments in three situations: a $250 reported payment, a documented $0 income-driven payment, and a deferment.
| Program | $250 reported payment | $0 income-driven payment | Deferred loan |
|---|---|---|---|
| Fannie Mae | $250 | $0 | $400 (1% of $40,000), or the amortizing payment |
| Freddie Mac | $250 | $200 (0.5% of $40,000) | $200 |
| FHA | $250 | $200 | $200 |
| USDA | $250 | $200 | $200 |
| VA | $250 (above the $166.67 threshold) | $166.67, or less with a servicer statement | $0 if deferred 12+ months past closing; otherwise $166.67 |
The VA threshold here is $40,000 × 5% = $2,000, then $2,000 ÷ 12 = $166.67.
What that does to the debt-to-income ratio
Your debt-to-income ratio (DTI) is your monthly debts divided by your gross monthly income. Assume this buyer earns $6,000 a month before taxes. Also assume a $1,700 housing payment (principal, interest, property taxes, homeowners insurance and mortgage insurance) and a $350 car payment. Those two debts total $2,050.
| Student loan payment counted | Total monthly debts | DTI |
|---|---|---|
| $0 | $2,050 | 34.2% |
| $166.67 | $2,216.67 | 36.9% |
| $200 | $2,250 | 37.5% |
| $250 | $2,300 | 38.3% |
| $400 | $2,450 | 40.8% |
At this income, every $100 of counted student loan payment adds about 1.7 points of DTI. That gap matters most when you are close to a program’s limit. For example, Fannie Mae caps DTI at 50% for loans run through its Desktop Underwriter system, while USDA’s standard limits are 29% for housing and 41% in total.
What changed for income-driven repayment in 2026?
Federal repayment rules changed a lot this year, so your plan and your payment may have changed too. Here is the status on studentaid.gov as of November 2026:
- SAVE ended. A court order ended the SAVE plan in March 2026. Servicers began sending notices on July 1, 2026, and borrowers then have 90 days to pick a new plan.
- RAP is open. The One Big Beautiful Bill Act, signed July 4, 2025, created the Repayment Assistance Plan (RAP). Its required payment is never less than $10 a month, so a RAP borrower should not show a $0 income-driven payment.
- Older plans are closing. Borrowers with loans from before July 1, 2026, can still use IBR, ICR and PAYE. A new loan disbursed on or after that date ends that eligibility, and PAYE and ICR end by July 1, 2028.
For the mortgage, the practical point is timing. If you are switching plans, the credit report may still show an old payment or $0. As a result, the lender may count a formula payment until a servicer letter shows your new one.
Income-driven plans also recertify once a year. Bring a letter that shows the current payment and the next recertification date, because Freddie Mac in particular adjusts for a payment that will change soon.
How to lower the student loan payment a lender counts
Most of these steps come down to documents. A lender can only use a lower payment that it can prove.
- Document your actual payment. If the report shows a payment higher than your bill, a current servicer statement may let the lender use the lower figure.
- Enroll in an income-driven plan before you apply. For example, a documented $120 payment beats a $200 formula payment under FHA or USDA rules, and under Freddie Mac rules when the plan does not recertify before your first mortgage payment.
- Pay off small loans. A paid-off loan drops out entirely. Keep enough cash for your down payment, closing costs and reserves, though.
- Pick the program that fits your status. A $0 income-driven payment favors Fannie Mae. A long deferment favors VA if you are eligible. Our FHA vs. conventional loan comparison covers the other tradeoffs.
Homeowners have one more option. Fannie Mae’s student loan cash-out refinance, in Selling Guide B2-1.3-03, waives the usual cash-out price adjustment when proceeds pay off at least one student loan in full. The payment goes straight to the servicer, standard cash-out loan-to-value limits apply, and cash back is capped at the greater of 1% of the loan or $2,000. Not every lender offers it.
Do private student loans follow the same rules?
Generally, yes. HUD defines student loans as “liabilities incurred for educational purposes,” and the other guides do not split federal from private loans. Income-driven plans exist only for federal loans, though, so only a federal loan can show a documented $0 income-driven payment.
FAQ
Do lenders use the actual student loan payment or 1%?
They use the actual payment when it is above $0 and documented. The 1% figure is Fannie Mae’s option for a deferred loan or one in forbearance. Freddie Mac, FHA and USDA use 0.5% instead when the payment shows $0.
How does FHA calculate student loans with a $0 payment?
FHA counts 0.5% of the outstanding balance when the credit report shows $0. On a $40,000 balance, that is $200 a month. FHA applies this whether the loan is in repayment, deferred or in forbearance.
Can deferred student loans be left out of DTI?
Only on a VA loan, and only with written proof that the deferment lasts at least 12 months past closing. Fannie Mae, Freddie Mac, FHA and USDA all count a payment on a deferred loan. Separately, FHA can drop a forgiven loan, and Freddie Mac can drop one documented as approved for forgiveness and close to it.
Does an income-driven repayment payment count for a mortgage?
Yes, if it is above $0 and you can document it, the program can use it. VA needs a servicer statement when it falls below the threshold, and Freddie Mac uses at least 0.5% of the balance if the plan is about to recertify or the payment will rise. A $0 payment counts as $0 only with Fannie Mae. The other programs substitute a formula payment.
Do student loans in forbearance count against you?
Yes. Forbearance pauses your bill, but the debt still counts. Lenders use 1% of the balance or an amortizing payment under Fannie Mae rules, and 0.5% under Freddie Mac, FHA and USDA rules.
Which loan type is best with student loans?
That depends on how your payment shows up. A documented $0 income-driven payment usually works best with Fannie Mae, while a long deferment works best with VA. With a documented payment above $0, Fannie Mae, FHA and USDA count it the same way. VA and Freddie Mac can adjust it, so the rest of your profile decides. Our guide to buying a house with student loan debt covers that broader picture.
What to do next
First, get a current statement or payment letter from each student loan servicer. It should show the balance, the monthly payment, the plan and any deferment end date. Then compare it with your credit report.
Next, use the table above to see how each program would calculate student loan payments in your situation. Finally, ask each lender exactly which student loan payment it will use in your DTI before you lock a rate. Our explainer on mortgage underwriting shows where that check happens in the process.
