Entering your loans
Enter the total balance across your student loans and the monthly payment on your credit report or servicer statement. It's fine if that payment is $0. Then pick the status:
- Repaying for a standard, graduated or income-driven plan with a payment above $0
- Income-driven, $0 when your income-driven plan sets the payment at $0
- Deferred or forbearance when no payment is due right now
If you have several loans in different statuses, run them one status at a time and add the results. The figures carry into the main affordability calculator so your price reflects them.
How each program counts student loans
The rules differ more here than anywhere else in mortgage underwriting, which is why two programs can give the same buyer very different numbers.
| Status | FHA | Conventional | VA | USDA |
|---|---|---|---|---|
| Repaying, payment above $0 | Actual payment | Actual payment | Reported payment if it's at least 5% ÷ 12; a lower one needs a servicer statement | Actual payment |
| Income-driven, $0 | 0.5% of balance | $0 with servicer proof | 5% of balance ÷ 12 | 0.5% of balance |
| Deferred or forbearance | 0.5% of balance | 1% of balance or documented payment | Left out if deferred 12+ months past closing; otherwise 5% ÷ 12 | 0.5% of balance |
Turning a payment into buying power
Once the counted payment is known, the calculator asks what it costs you. When debts are what's capping your price, every $100 a month in counted debt takes about $14,360 off an FHA price in Broward at 5.75%. On VA, $100 a month is worth about $14,800 of price because there's no monthly mortgage insurance.
$40,000 on an income-driven plan
A buyer owes $40,000 in student loans on an income-driven plan with a $0 payment.
| Program | Counted payment | Buying power it costs |
|---|---|---|
| FHA | $200.00 (0.5%) | about $28,700 |
| Conventional | $0 with servicer letter | $0 |
| VA | $166.67 (5% ÷ 12) | about $24,700 |
| USDA | $200.00 (0.5%) | depends on the 29% and 41% ratios |
For this buyer, Conventional counts nothing at all. With a 620 score or better and a 50% total ratio, Conventional can come out ahead of FHA even though FHA usually wins on ratios.
Now change the status to deferred. Conventional switches to 1% of the balance, which is $400 a month, twice what FHA counts. FHA and USDA stay at $200. If the deferment runs at least 12 months past the closing date, VA counts nothing.
Switch it once more to repaying at $260 a month. Every program counts the $260, and on FHA that costs about $37,300 of price.
Getting the lower number counted
Ask your servicer for a letter that shows your current payment, plan type and balance. That one page is what lets a lender use the lower figure. If you're on a $0 income-driven plan and your score is 620 or higher, have the lender run Conventional next to FHA.
If student loans are pulling your number down, a co-signer adds income without touching the loans. The co-signer calculator shows how much, and the student loans guide goes deeper into each program's documentation.
Student loan rules are easy to get wrong on a first pass. AAA Capital Funding at 888-601-8344 can look at your servicer statement with you and tell you which program counts your loans the lightest.