FHA Updates Student Loan Debt Policies Making Mortgage Credit More Accessible
The Federal Housing Administration (FHA) has announced updates to the monthly mortgage payment calculation for borrowers with student loans (read the full press release here ).
Who it helps
This helps anyone with student loan debt, but the benefits will be felt most by people of color and people ages 25-49. These people are typically first-time homebuyers and make up roughly 80 percent of FHA insured mortgages.
“This announcement enhances FHA’s ability to serve one of its core demographics—first-time homebuyers. Over 80 percent of FHA-insured mortgages are for first-time homebuyers on average each year. FHA estimates that more than 45 percent of these borrowers also have student loan debt, with much of this debt impacting people of color.”
What it does
The new policy calculates the monthly payment based on the actual monthly student loan payment, rather than the previous policy which calculated the payment as one percent of the total outstanding student loan balance. The monthly payment will typically be calculated as lower and therefore it will be easier for people with student loan debt to be accepted for an FHA insured mortgage.
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