Asked by Tyshia  |  Submitted April 22, 2017

How can I qualify for an FHA loan with a student loan? Will the 1% balance rule apply?

Lenders want to use the income-based repayment and 1% balance rule. It won't be an income-based repayment, but lenders will apply the 1% rule. Is this correct? Does Freddie Mac use this rule?

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  Answers  |  1

April 25, 2017

Yes, fortunately FHA now allows borrowers to qualify using an estimated payment of 1% of their student loan balances. Note that even if the loans are in deferment, or are on income-based repayment with lower monthly payments, the 1% figure still applies. It could be worse – it was 2% for a while, which really made qualifying difficult. Do you have any more questions? I write loans nationally and I'm glad to help. Contact me through my profile.

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