The Federal Housing Administration (FHA) recently changed an important policy to make it easier for student loan borrowers to get approved for a mortgage.

Now, mortgage lenders can use the monthly payment amount on a borrower’s credit report or the actual documented payment in qualification. When the monthly student loan payment on a credit report is not reported or shows as $0, lenders will apply 0.5% of the outstanding loan balance. This is a big change from before. Lenders were previously required to use a greater calculation of 1% of the outstanding student loan balance or the amount reported on a borrower’s credit report. This could make their payments appear higher. In some cases, depending on the borrower’s debt and credit profiles, it could actually keep them from getting approved from a mortgage.

This policy change is exciting news for those who have outstanding student loan debt and are trying to qualify for a mortgage. If you’d like to discuss or know someone who might benefit from this change, reach out to Sente Mortgage!