The rules seem to keep changing in regard to how the mortgage industry looks at student loan payments and it can have a drastic impact on a buyers ability to purchase a home.  Here is a breakdown of the different loan programs and how they look at student loans.

VA – By far this is the best option.  My hope is that the other programs adopt a similar guideline.  If the borrower can prove their student loan will be deferred for at least 12 months then we do not have to qualify with a payment.

If no payment is listed then the borrower can provide a statement with the payment or we can use a calculation of 5% of the balance divided by 12. If a payment is listed, and it is more than the above calculation then we can use that payment.  If the payment is less than the calculation, then a statement is required that reflects the term.

FHA & USDA – If there is not payment listed on the credit report, we are required to use 1% of the balance or prove a fully amortizing payment.  This means that deferred and income-based payments are not allowed.  If there is a payment listed on the credit report and it is less than 1% of the balance, we are required to prove it is fully amortized (meaning not income-based)

Conventional – This is very similar to FHA & USDA but if no payment is listed and we know the interest rate then the following applies, which may work out better than the 1% calculation.