How to Get a Mortgage with High Student Loan Debt

how to get a mortgage with high student loan debtGetting a mortgage with high student loan debt can be challenging, but there are some strategies you can use to help you qualify.


Student loans are a great tool to get you through college; I used them myself. But when it’s time to get a mortgage, a high student loan balance can send your debt-to-income ratio (DTI) over the limit. But fear not, there are some strategies you can use to help you qualify for your conventional or FHA loan. They are not fool proof, but in many cases they can help.


How Do Lenders Look at Student Loans When Qualifying Your Home Loan?


When your loan officer pulls your credit report, the student loan will be on there, and we MUST use the monthly payment that’s on there. There is no way around it.

BUT, many people have their student loans in deferment, and in that case the monthly payment will show up as zero. Great news, right? Not so fast cowboy. Lenders won’t allow us to use zero as a monthly payment. You see, lenders know that at some point, you’ll start paying again, and they want to know when that happens you can still afford to pay your mortgage. So, what then?

If your student loan is in deferment, and the payment shows as zero on your credit report, we have a couple options

  1. If we use the Fannie Mae AUS (Automated Underwriting System), we have to state the monthly payment as 1 percent of the loan balance on the loan application. For example, if your student loan balance showed as $55,000 on your credit report, we would use $550 as your monthly payment. This is for conventional, FHA and VA loans.
  2. But if we use the Freddie Mac AUS, we only have to show ½ percent as the payment. So in that same case, where your loan balance is $55,000, we can show your monthly payment as $275. That may be the difference between approval and denial for you loan. Keep that in mind that this is only good for conventional loans.

So using the Freddie Mac AUS is a great strategy to help you qualify for your conventional loans.

But I Have a Very High Student Loan Balance, How Can I Qualify for a Conventional Loan?


One of the biggest challenges as a mortgage broker is trying to qualify buyers with VERY high student loan debt. Usually younger professionals, early in their career that attended college and grad school, often have high student loan debt. And if we use the payment that shows on their credit report, or even one of the strategies above, it blows their DTI out of the water.

It’s very discouraging. These young professionals did everything right by using student loans to pay for their college, now have a good job, but now can’t get a loan. But all is not lost!

Here’s a Trick to Lower Your Student Loan Payment


When I see high student loans, one of the tricks I use is to get them into Income Based Repayment, or IBR. Income Based Repayment simply means that the company that holds your student loans will look at your yearly income, and will adjust your monthly student loan payments as a percentage of that. I don’t know the exact formula they use, but we’ve had success in significantly lowering a buyer’s monthly payment, to the point where we were able to get them approved for a conventional loan. This only works for conventional loans, and for Fannie Mae AUS, but if successful, it’s a great way to get you qualified.

And even better news, I work with a company that will guide you through the whole process, and even do the paperwork for you. And it’s very affordable. The process only takes a few weeks, and once we get the document we need from your student loan provider, we can get you approved.

If you want more info about the company, shoot me an email and I will give your more info and get you set up.

I’m Your first Call.

Your first step should always be to talk to a mortgage professional. Schedule a time speak with me today, it doesn’t matter if your’e already under contract, or if you are buying until next year. I need to make sure we get you ready, and that you’re doing the right things today, so when you do make an offer, you are all set. I see too many people that take advice from the internet or non-professionals and mess up their chances to buy.

Talk to Jesse – Mortgage Expert: click here to schedule a time to talk.


Jesse RiveraMy name is Jesse Rivera. I’m licensed in the State of California and I live and work in beautiful Long Beach, CA. I can do loans for the whole state of California, but I specialize in SoCal, especially Long Beach, Los Angeles County and Orange county.

Working with a Mortgage Broker (instead of a bank or retail lender) has its benefits.

  • My rates are hard to beat. As a mortgage broker, I have a lot more flexibility on how I price loans, and often lower my compensation to get my borrowers a better rate, or money for closing costs.
  • I work with over 100 lenders and have a lot more available programs, so can often get a loan done when other lenders can’t.
  • I can close a loan in 3 weeks.
  • In this market, I have some great strategies to get your loan accepted, and help with low appraisals. My buyers are great success.
  • I used to be a high school math teacher, so my emphasis is always education. My goal is to let you know what is going on, what’s coming next, and why it’s happening and important. Communication is my greatest tool, and I use it liberally.
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