With nearly $1.84 trillion in outstanding student loan debt spread across more than 42 million Americans, it’s no surprise that student loans are one of the biggest concerns we hear from prospective homebuyers. Here’s the good news: student loans don’t disqualify you from getting a mortgage. But they do affect your debt-to-income ratio, and the way lenders calculate that impact varies depending on the loan program. Understanding these differences can be the key to getting approved.
How lenders factor student loans into your DTI
Your debt-to-income ratio is your total monthly debt payments divided by your gross monthly income. It’s one of the most important numbers in your mortgage application. Student loans count toward that monthly debt figure, even if your loans are deferred, in forbearance, or on an income-driven repayment plan with a $0 payment.
When your credit report shows a $0 monthly payment, lenders don’t just use zero. Instead, they calculate a payment based on your outstanding balance, and the percentage they use depends entirely on which mortgage program you’re applying for.
FHA, conventional, and VA loans all play by different rules
FHA loans use 0.5% of your outstanding student loan balance as your monthly payment whenever your credit report shows $0. So if you owe $60,000 in student loans, FHA underwriting adds $300 per month to your DTI, regardless of whether you’re actually making payments. If your income-driven repayment plan has an active payment above $0, the lender can use that actual amount instead.
Conventional loans through Fannie Mae offer the most favorable treatment. If you’re on an income-driven repayment (IDR) plan and your documented payment is $0, Fannie Mae allows lenders to use that $0 for DTI purposes. That’s a significant advantage over every other loan program, creating a favorable DTI with a better chance at qualifying for your dream home. However, if you have deferred loans or in forbearance, the lender must use 1% of the balance or the fully amortizing payment. Freddie Mac takes a slightly different approach, requiring 0.5% of the balance when a $0 payment is reported, with no exceptions for IDR plans.
VA loans have their own calculation: 5% of the outstanding balance divided by 12 months. On a $60,000 balance, that’s $250 per month. But VA loans also have a unique advantage: if you have deferred student loans for 12 or more months beyond your closing date, they can be excluded from DTI entirely.
The SAVE Plan is Gone: What Now?
On March 10, 2026, the Saving on a Valuable Education (SAVE) plan was canceled by the Eighth Circuit Court of Appeals, leaving nearly eight million former students pondering what’s next. These individuals now have until June 8 to find a new plan; otherwise, they will be automatically placed on a standard student loan payment plan.
The fix for your mortgage? Switch to Income-Driven Repayment (IDR) before you apply for a mortgage. An IDR involves monthly payments, and those on the plan must recertify their plan by updating their income and family size. For some, their IDR payment plan can be as low as $0 a month, and any remaining balance after completing the plan may be forgiven.
Strategies to Take
- Get on an IDR plan and document that lower payment before applying
- Choose the right loan program for you
- Pay down high-interest debt first
- Work with a lender who understands these guidelines. My Easy Mortgage has experience with student loan programs and can help with any pressing questions for homebuyers who have student loan debt.
Student loans are a factor in your mortgage approval, but they’re not a death sentence. The borrowers who struggle are usually the ones who don’t know the rules going in. The ones who get approved are the ones who plan and work with a lender who knows how to structure the deal around their real financial picture.
Whether you are a first-time buyer or looking to refinance, My Easy Mortgage, a reputable mortgage broker located at 2405 Creel Lane, STE 102, Wesley Chapel, FL 33544, and 16703 Early Riser Ave, Suite 266, Land O’Lakes, FL 34638, has a team of experienced professionals who can guide you through the process. Contact them at (813) 513-9846 to discuss your mortgage needs.