On this page
Higher education is expensive. If you plan to buy a home, it helps to know how mortgage lenders calculate student loan payments.
Unless you can cover college costs upfront, you’ll need to apply for student loans.
The thought of repaying thousands of dollars in student loan debt can be scary. Add to that the concept of buying a home, and it can be downright overwhelming.
However, it isn’t impossible to get a mortgage for a home if you have student loans. It might even be easier than you think.
Check your home buying eligibility. Start here (Nov 3rd, 2026)
How student loans affect getting a mortgage
One of the primary indicators that impact your ability to obtain mortgage financing is your debt-to-income ratio.
Lenders figure your debt ratios by dividing how much debt you have by how much income you earn.
Your student loans can have a significant impact on your debt ratios.
This will vary according to the payment required on your student loans. It will also vary based on the type of mortgage for which you’re applying.
Your maximum debt ratio, including student loan payments, depends on the loan program and the automated underwriting result. Fannie Mae allows up to 36% for manually underwritten loans, or up to 45% with strong credit and reserves. When Desktop Underwriter approves the loan, the limit is up to 50%.
FHA’s base manual limit is 31% of income for housing and 43% for total debt. With compensating factors, those limits can rise as high as 40% and 50%, and automated approvals can go higher. USDA uses 29% and 41%, with waivers possible.
Add up your student loan payments, your other payments (e.g. credit cards, auto, etc.) and then your new housing payment. A lower total as a share of your income usually means better terms.
Here’s an example of how a lender could calculate your debt ratio:
Student loans ($250) + credit card ($100) + car ($300) + mortgage ($1000) = $1,650 per month.
Let’s then say your income is $47,000 per year, or $3,917 per month.
Then the lender would divide your total monthly debt of $1,650 by $3,917. Using these numbers, your debt-to-income ratio would be 42%. Whether that is acceptable depends on the loan program and the rest of your application.
Repayment plans and how lenders calculate student loan payments
Borrowers can repay student loans in a number of ways. Among them are:
- Standard repayment
- Extended repayment
- Graduated repayment
- Income-based repayment
- Income-contingent repayment
- Pay As You Earn repayment
- Repayment Assistance Plan
The SAVE plan is no longer available. Income-based repayment, income-contingent repayment and Pay As You Earn remain available for loans made before July 1, 2026. But income-contingent repayment and Pay As You Earn will phase out. A new Repayment Assistance Plan started on July 1, 2026. See Federal Student Aid for the current plans.
Your mortgage lender may or may not calculate student loan payments the same way your repayment plan does.
Each mortgage program has its own rule for the student loan payment it counts in your debt ratio. For most programs, lenders can no longer leave a deferred loan out of the calculation.
What VA lenders use to calculate student loan payments
VA loans are the only mortgage loans that can still leave a deferred student loan payment out of the debt ratio.
Per the VA, “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.”
A student loan may be in repayment now or start repayment within 12 months of closing. In that case, the lender must consider the anticipated monthly obligation. VA sets a threshold payment for each loan at 5% of the outstanding balance divided by 12 months. For example, a $25,000 student loan balance x 5% = $1,250, divided by 12 months = $104.17 per month.
The lender then compares that threshold with the payment on the credit report:
- The lender must use the payment(s) reported on the credit report for each student loan. This applies if the reported payment is greater than the threshold for payment calculation above.
- If the reported payment is less than the threshold above, the loan file must contain a statement from the servicer to count the lower payment. The statement must reflect the actual loan terms and payment information for each student loan.
Do Fannie Mae and Freddie Mac calculate student loan payments the same way?
Conventional loans follow different guidelines depending on whether Freddie Mac or Fannie Mae backs the loan.
For Freddie Mac, lenders must use the payment shown on the credit report when it is above zero.
This applies to income-driven repayment plans as well. If other documentation in the file supports a different current payment above zero, the lender may use that amount instead.
A student loan’s repayment period may not have started yet because the homeowner is still in school. Or the servicer may have suspended the payment for a period of time. Either way, Freddie Mac still requires a payment above zero in the monthly debt ratio.
When the credit report shows no payment or a $0 payment, Freddie Mac uses 0.5 percent of the outstanding balance. This includes a deferred student loan or one in forbearance.
Fannie Mae accepts the actual payment on an income-driven repayment plan, including $0 if documented. For deferred or forbearance loans, lenders may use 1% of the balance or a fully amortizing payment.
For those loans, lenders must include a monthly payment based on one of the following:
- One percent of the outstanding balance, even if it is lower than the fully amortizing payment, or
- A calculated payment that will fully amortize based on the documented loan repayment terms
FHA loans
FHA uses the payment reported on the credit report if it is above zero. If the report shows no payment or $0, the lender uses 0.5 percent of the outstanding balance. The same rule covers a deferred loan.
Check your FHA eligibility. Start here (Nov 3rd, 2026)
USDA loans
Like with FHA loans, USDA uses the documented payment if it is above zero. Otherwise, it uses 0.5 percent of the outstanding balance, regardless of the loan’s status.
Check your eligibility for a USDA loan. Start here (Nov 3rd, 2026)
Student loans & mortgage approvals
Some college-educated Americans with student loan debt postpone buying a home because of that debt.
It’s true that student loans affect your monthly budget and, in turn, your debt ratio. Your debt ratio impacts your chances of mortgage approval.
However, student loans do not have to be a barrier to getting a mortgage.
Each mortgage program has its own way to calculate student loan payments. So ask your lender which payment it will use in your debt ratio. Knowing that up front makes it easier to plan, even with your student loans.
Check your home buying eligibility. Start here (Nov 3rd, 2026)
