I’m one of those millennials on the older end of the generation and student loans is basically crippling me when it comes to making life choices. That includes purchasing a home. I wasn’t really interested in purchasing a home until recently. I think it may be the fact that I’m approaching 30. Any other time I thought about it I just knew I couldn’t because of student loans but these new rules Fannie Mae has come up with to help people with student loans seem like they may help. Here are the basics. Anything I missed or further explanation can be found in this article.
1. You can roll your student loan balances into a home equity. You could always do this but there are new circumstances.
2. Your IBR payments would be considered as your monthly payment. In the past the lender would consider 1% of your student loans to be your monthly student loan payments which could severely impact your debt to income ratio.
3. Payment made by others won’t be factored into your mortgage calculation. If a family member is paying for one of your loans you would not have to include that loan as a debt in the application process.
While I like that the new rules are allowing more people to purchase home and achieve their goals I’m also concerned that some people may still get into a mortgage without realizing if they can actually afford it or not even though the rules may help them qualify. IBR payments fluctuate depending on income. What happens if your IBR goes up and your taxes? Can you afford that mortgage? What happens if a family member decides they no longer wish to help pay that student loan for you? would you still be able to afford the mortgage?