I have been planning on buying a home, most likely by October. However, it seems the chances have just became dim. Previously, I was told that my DTI can be calcuated with the documented payment. However, this info from posted by FHA on 4/16/16 FHA seems quite saddening (for those of us with huge amount of student loans and modest income):
- A 50 percent reduction in the percentage used to calculate monthly student loan obligations, or the use of the actual documented payment when the payment fully amortizes the loan over its term. This may result in increased purchasing ability for some borrowers, while ensuring borrowers have the long-term ability to meet debt obligations. Here is the Link to April 2016 FHA Guidelines.
If I am reading this correctly, I cannot use any repayment plan as the documentation of income if the amount of payment will ever change. Am I interpreting this correctly? I beleive Fannie Mae has the same guidelines, however Freddie Mac does not. 1% of my student loans is $ 800 whereas I only pay $ 220 on my repayment plan. I am also a government employee, so my loans will be forgiven in 10 years. None of this seems to matter though.
Also, I am very new to this mortgage thing. Do mortgages have to be either backed by Fannie Mae, Freddie Mac, or FHA? I sent a loan officer a similar question and she responded by saying, “There are some investors that require the 1% rule, but we have lenders that are able to use the reduced payments also as long as we have documentation. ” There are downpayment assistance programs I am interested in but they require FHA, Freddie Mac, or Fannie May loans. I do not know how a lender can ignore the 1% rule as the guidelines seem pretty clear. I think I may be missing something?