Student Loans


If a payment amount is provided on the credit report, that amount can be used for qualifying purposes. If the credit report does not identify a payment amount (or reflects $0), you can use either 1% of the outstanding student loan balance, or a calculated payment that will fully amortize the loan based on the documented loan repayment terms.  If the borrower is in an IBR (income based repayment) plan you may use the current IBR payment as long as you have a copy of the current IBR agreement in the file to support the payment amount.



For all student loans, whether deferred, in forbearance, or in repayment (not deferred), the monthly payment must be determined as follows:

  • If the payment is not listed on the credit report or is listed as deferred, obtain current documentation to support the payment amount to be included in the monthly debt-to-income ratio.
  • If no payment is reported, and there is no documentation in file indicating the proposed monthly payment amount, use a minimum of 1% of the outstanding balance for qualifying.



Regardless of the payment status, use either:  The greater of 1% of the outstanding balance reported on the loan or the monthly payment reported on the credit report or the actual documented payment provided the payment will fully amortize the loan over its term.



A fixed payment may be used when you document and verify the payment is fixed, the interest rate is fixed, and the repayment term if fixed. There must be no future adjustment to the terms of the payment.  If the payment is subject to change such as payments for deferred loans, Income Based Repayment (IBR), Graduated, Adjustable, and other types of repayment agreements which are not fixed you must use one percent (1%) of the loan balance reflected on the credit report.



If the Veteran or other borrower provides written evidence that the student loan debt will be deferred at least 12 months beyond the date of closing, a monthly payment does not need to be considered.  If a student loan is in repayment or scheduled to begin within 12 months from the date of closing, you must consider the anticipated monthly obligation in the loan analysis and utilize the payment established below. Calculate each loan at a rate of 5 percent of the outstanding balance divided by 12 months (example: $25,000 student loan balance x 5% = $1,250 divided by 12 months = $104.17 per month is the monthly payment for debt ratio purposes).

  • You must use the payment(s) reported on the credit report for each student loan(s) if the reported payment is greater than the threshold payment calculation above.
  • If the payment reported on the credit report is less than the threshold payment calculation above, the loan file must contain a statement from the student loan servicer that reflects the actual loan terms and payment information for each student loan(s). The statement(s) must be dated within 60 days of closing and may be an electronic copy from the student loan servicer’s website or a printed statement provided by the servicer.