Tips for Getting Student Loans Forgiven for First Time Homebuyers

Today, we're going to talk about student loan forgiveness. Hello, this is David Xie with the Xie Mortgage Team. It's actually been on the news so much, and we're going to focus strictly on conventional loans right now because this is an extremely long topic.

One of the things that you need to know is with conventional student loans, you are following agency guidelines. So you're looking at different debt to income ratios at 49 as the max, depending on your credit score. You then have to look at private mortgage insurance and a lot of other factors. So the first time home buyers, there are different programs out there for you such as home possible and home ready.

And the great thing about those is that you do get a break in your interest rate as well as the private mortgage insurance. The other thing about that is that it does follow the conventional guidelines for student loans. If there is a payment on the credit report, we're going to use that amount. If not, we are going to use the amount on the student loan documentation.

However, if it's a zero on the credit report, we are going to use the loan documentation from the student loan servicer. And we can exclude the payment if there's a third party paying for it. So there's all these parent plus loans now out there. So if your parent is paying for it, as long as we can verify by getting 12 months of canceled checks, we can not count the payment against you.

The other thing that you want to keep in mind is there is deferment and forbearance. With those, if we don't have any documentation on it, we're going to be using 1% of the outstanding balance. However, if we can get some documentation and the documentation shows that it is fully amortized, we can use those payments.

There are also opportunities if you are on a income driven payment plan. If you're on that income driven payment plan, as long as it is amortized, we can use that a monthly payment and sometimes it is zero. That is definitely an advantage over your government finance loans. On Freddie Mac, there are different guidelines on those.

Most of the other guidelines that we talked about still apply with Freddie Mac. However, there are opportunities where we started talking about with forgiveness discharge requirements that we can use. We would have to get some documentation from the servicer. The other thing we can do is if we can show that there are 10 payments or less, we can not count that payment against you.

Student loans are a big topic out there and definitely conventional loans have their advantages such as sometimes lower PMI premiums. You may not have to get upfront premium as well as a monthly premium. You can have either or if you're putting less than 20% down. There are seller contribution restrictions, down payment, and closing costs. But closing costs that you can receive from the seller could vary depending on your down payment.

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However, PMI does go away after a certain period of time if you go with monthly. There's also options of split premium, which is going to be more similar to your FHA version. But with higher credit scores like I said, the monthly is lower. Finally, there's a single premium that you can finance in all up front and you will not have a monthly premium.

If you have any questions about qualifying for a student loan, or want to know more about the forgiveness and how we can use that to help you qualify for a home, please feel free to reach out to me and my team. My name is David Xie at the Xie Mortgage Team. We can be reached at (757)-478-8493. And be sure to like this video, subscribe to the channel, and click on the notification bell so you'll know about the next video that comes out. All right, I'll talk to you later. Bye.