Student loans and getting a mortgage

Many families who want to buy a home have student loans, their own or their children’s. Those loans do not keep you from buying, but they do change how much you can borrow, because the lender adds them to your other debts. The key question is which monthly payment the lender will use: the one on your credit report, your income-driven plan payment, a percentage of the balance or zero. Each program has its own rule. This guide explains FHA’s and Fannie Mae’s with their sources, so you ask for the right papers before you apply.

Of the balance: the payment FHA uses when your report shows $0

0.5%³

Of the balance: what Fannie Mae can use if your loan is deferred or in forbearance

1%²

Minimum payment in the federal Repayment Assistance Plan that began in July 2026

$10⁴

Why your student loan changes what you can borrow

Lenders measure your ability to pay with the debt-to-income ratiodebt-to-income ratio (DTI)Your debt-to-income ratio (DTI) is all your monthly debt payments divided by your gross monthly income, that is, income before taxes. If you pay a certain amount each month across a car, cards, student loans and the mortgage you are asking for, and you earn three times that, your DTI is one third. Lenders use it to measure whether you can manage the payment; each loan type and lender sets its own limit, and assistance programs usually publish theirs. Paying down debt before applying improves your DTI.See the full definitionClose, or DTI: all your monthly debt payments divided by your grossgross incomeGross income is the total you earn before taxes and other deductions are taken out. On your pay stub it shows up as gross pay, not as what lands in your account. Lenders use it to figure your debt-to-income ratio (DTI): they add up your monthly debt payments and divide them by your gross monthly income. When you apply for a mortgage, your annual pre-tax income can include full-time or part-time work, self-employment, tips, commissions, overtime and bonuses; the lender looks at whether you can reasonably expect that income to continue.See the full definitionClose monthly income. Each product and each lender has its own limits.¹ Your student loan payment goes into that sum. If the lender uses a high payment, your DTI rises and you may be able to borrow less. If it uses a low, documented payment, your DTI drops.

That is why knowing how much you owe is not enough. What matters is which monthly payment appears on your credit report and which papers you can show. The guide Debt-to-income ratio and how to lower it walks through the full math.

Before you compare offers, ask each lender which student loan payment it used to calculate your DTI. Two lenders can reach different numbers with the same loan: one may offer you an FHA loan and another a conventional one, and each product and each lender has its own limits.¹ If the difference is large, ask why. Sometimes handing in the right statement is enough to lower the payment that gets used, and that changes how much you can borrow.

How Fannie Mae counts it (conventional loan)

Fannie Mae’s Selling Guide, which many conventional loans follow, gives the lender these options:²

• If the credit report shows a payment, the lender may use that payment.
• If the report shows the wrong payment, it may use the payment on your most recent statement.
• If the report shows no payment or $0, it must determine one:
  • If you are on an income-driven plan and the lender verifies with documents that your actual payment is $0, it can qualify you with $0.
  • If your loan is deferred or in forbearance, it may use 1% of the balance, even if that is less than the fully amortizing payment, or a fully amortizing payment under the documented terms.

So with Fannie Mae, an income-driven plan with a well-documented $0 payment can help you a lot. A pause, on the other hand, is not counted as zero. The guide to the conventional loan explains the rest of the program.

How FHA counts it

For an FHA loan, HUD Handbook 4000.1 requires including all your student loans in your debts, regardless of the payment type or whether you are paying now.³ The payment used is:

• The credit report payment or your actual documented payment, when it is above zero.
• 0.5% of the balance, when the report shows a payment of zero.

If the lender wants to use a payment lower than the one on the report, it needs written documentation from the creditor or student loan servicer with your actual payment, account status, balance and terms. And if the balance was forgiven, canceled, discharged or paid in full, it can leave the payment out with a letter saying so.³ The guide to the FHA loan explains the full program.

The same student loan, two programs

Selling Guide B3-6-05

Fannie Mae (conventional)

• Uses the report payment or the one on your statement
• Income-driven plan with a documented actual payment of $0: can qualify you with $0
• Deferred or in forbearance: 1% of the balance or the full payment

HUD Handbook 4000.1

FHA

• Includes every student loan, whatever its status
• Payment above zero: the report payment or your actual documented payment
• Report at $0 (for example, during a pause): 0.5% of the balance

With a documented $0 payment, Fannie Mae can be more favorable; with a paused loan, FHA's 0.5% is less than Fannie Mae's 1%.

Example with real numbers

How much each rule weighs per $1,000 of balance

An example with this guide's rules, per $1,000 you owe; multiply it by your balance.

Paused loan, FHA loan (0.5% of the balance)

$5 a month per $1,000

Paused loan, Fannie Mae (1% of the balance)

$10 a month per $1,000, or the full payment

Income-driven plan with a documented $0, Fannie Mae

$0

Income-driven plan with a payment above zero, FHA or Fannie Mae

Your actual documented payment

What to bring

A letter from the servicer with your payment, status and balance

The rules come from Fannie Mae and HUD.²³ Try the how-much-house calculator with the payment your lender uses.

Run it with your numbersHow much house can I afford?

The new federal repayment plan and your application

Federal law created an income-based repayment plan that the Department of Education offers since July 1, 2026: the Repayment Assistance Plan (RAP). In that plan, if the calculated payment comes out below $10, the monthly payment is $10. Also, each year it is determined whether you still qualify, and your annual income is verified for that.⁴

What does this mean for your mortgage? In RAP your payment does not reach $0, so the lender will use your actual documented payment, the one on your statement or in the servicer’s letter.²³ Since the payment can change each year with your income, check that the letter you hand in shows the current payment. If you change plans while your loan is in process, tell the lender and give them the new document.

If you have a past-due federal loan

This is the point that can stop an FHA loan most. According to HUD’s Handbook, the lender cannot process an FHA loan if you have delinquent federal non-tax debt, and a federal student loan in default is one of those debts. The lender must check every borrower in a government system called CAIVRS. If a debt shows up, it must confirm it with the agency that is owed.³

If the agency confirms the debt is valid and delinquent, you are not eligible for FHA until you resolve it with that agency. But there is a protection: you cannot be denied solely because of CAIVRS information that has not been verified.³ If you think the information is wrong, ask the lender to confirm it with the agency. If you know you are behind, start resolving it months before you go house hunting.

Get your student loan ready before you apply

1. 1. Check your credit reports

   3 months before

   See which payment appears on each student loan and whether any shows $0.²

2. 2. Ask for the servicer's letter

   2 months before

   With your actual monthly payment, account status, balance and terms.³

3. 3. Confirm your repayment plan

   Before applying

   If you are on an income-driven plan, keep the letter showing your current payment.⁴

4. 4. Resolve any past-due federal debt

   As soon as possible

   A past-due federal loan keeps you from FHA until you resolve it with the agency.³

5. 5. Ask how your payment is counted

   When you seek preapproval

   Ask which payment the lender will use and under which rule.¹

   Try it with your numbersHow much house can I afford?

If someone else pays your loan

It is common for a parent or spouse to pay someone else’s student loan. With Fannie Mae, if you owe the loan but another person is the one actually paying it, the lender can leave that payment out of your debts. For that it needs that person’s canceled checks or bank statements for the last 12 months, with no late payments. This does not apply if the payer is an interested party to the purchase, such as the seller or the agent.²

The same rule works the other way around. If you co-signed your son’s or daughter’s student loan and they are the one paying it, that loan also shows up as your debt. Fannie Mae applies this policy whether or not the other person is also obligated on the loan, so 12 months of your child’s on-time payments from their own account can leave it out of your debts.²

If you plan to use this rule, ask the person who pays to always do it from their own account, on time and with a clear record. A cash payment with no trail cannot document it.

If this is your situation

Your loan is paused

It does not count as zero: if the report shows $0, FHA uses 0.5% of the balance; Fannie Mae, 1% or the full payment.³²

Your income-driven plan gives you $0

With Fannie Mae you can be qualified with $0 if it is documented; with FHA, a $0 report leads to 0.5%.²³

Your parents pay your loan

With Fannie Mae, 12 months of their payments with no late ones can leave it out of your debts.²

Your federal loan is past due

You are not eligible for FHA until you resolve it with the agency; start before you go house hunting.³

Your loan was forgiven

With FHA, a forgiveness or discharge letter leaves the payment out of your debts.³

Costly mistakes

• Mistake: Thinking a paused loan does not count.

  Instead: It does: with a $0 report, 0.5% of the balance with FHA; 1% or the full payment with Fannie Mae.³²

• Mistake: Showing up without the servicer's letter.

  Instead: FHA needs written documentation if the payment used is lower than the one on the report.³

• Mistake: House hunting with a past-due federal loan.

  Instead: Resolve it first with the agency; otherwise FHA cannot approve you.³

• Mistake: Handing in a letter with an old payment.

  Instead: Your payment can change each year with your income; give the current document.⁴

• Mistake: Letting your relative pay in cash.

  Instead: Leaving it out of your debts takes 12 months of checks or bank statements.²

Free help

A HUD-approved housing counselorHUD-approved housing counselorA HUD-approved housing counselor works at an agency HUD has approved to provide housing counseling: independent, expert advice customized to your situation about buying a home, renting, a missed mortgage payment, a foreclosure or credit problems. The agencies usually charge little or nothing; many serve in Spanish and offer the homebuyer education course several assistance programs require. They are not lenders or real estate agents and sell you nothing. Your county page lists the official agencies with phone numbers.See the full definitionClose can review your budget and debts with you before you apply, often at little or no cost. You search by ZIP code on the CFPB’s website.⁵ The guide HUD-approved housing counselors explains what to expect. When you are ready, Preapproval vs. prequalification helps you take the next step.

What to do this week

1. Check your credit reports and write down the payment shown on each student loan.²
2. Ask your servicer for a letter with your actual payment, status, balance and terms.³
3. If you are on an income-driven plan, keep the letter with your current payment.⁴
4. If any federal loan is past due, start resolving it with the agency.³
5. Estimate how much you can borrow with the how-much-house calculator and organize your spending in the family budget.¹
6. Read How to read your credit report to check that each loan is reported correctly.