Mortgage News

The New FHA Handbook and Student Loans

September 11th, 2015

While the real estate world prepares for the TILA-RESPA Integrated Disclosures (also known as TRID) to take effect on October 3rd, there are other regulations you need to know about.

For instance, starting on Monday (September 14), we will need to follow the the new HUD (Dept. of Housing and Urban Development) handbook.

Why does the new handbook matter? The changes will impact how we qualify and analyze borrowers for FHA loans.

Over the next few weeks, I will cover many of the updates and how they may impact your clients.

Today’s topic: STUDENT LOANS

For a student loan, if the actual monthly payment is zero or not available (even if payment is deferred), the lender must use two percent of the outstanding balance to establish the monthly payment and count it in the debt-to-income ratio calculations.

However, if a borrower is on the pay-as-you-earn program, which caps monthly payments based on income, and their payment is zero, the lender may use it. Read more here.

As the most educated generation in US history, millennials are known to have a lot of student loan debt so the “two percent” rule could have a significant impact on someone’s ability to qualify for a loan.

Please let me know if you have any questions, I can be reached at 757-490-4726 orsrubin@tidewaterhomefunding.com

Tidewater Home Funding

Tidewater Home Funding, LLC NMLS# 41552
(www.nmlsconsumeraccess.org).
Equal Housing Lender.

Licensed in Virginia, North Carolina & Florida.

VSCC Bureau of Financial Institutions, P.O. Box 640, Richmond VA 23218-0640, (1-800-552-7945) www.scc.virginia.gov/bfi

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