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Freddie Mac Student Loan Underwriting Guidelines

Freddie Mac Student Loan Guidelines

Deferred Payments

Freddie Mac does not currently allow you to have deferred student loan payments when qualifying for a home mortgage.

If you are still in school and not making payments on your student loans now, there are several methods that the lender will use to determine what payment will be used for qualifying purposes.

Payment Calculation Options

If no monthly payment is reported on a student loan on your credit report, the lender must document what the payment would be if you were to start making payments.

Examples of documentation of the required payment amount include:

  • Payment listed on current credit report (IBR payments are OK)
  • A statement from the student loan lender stating what the payment will be in the future; or
  • A copy of the installment loan agreement; or
  • If no other documentation can be obtained showing what your future payments would be, the lender must use 1% of the loan balance as the monthly payment for qualifying purposes.

IBR Income Based Repayment

Freddie Mac is currently the only underwriting method that will allow you to use an IBR, or income based repayment amount when qualifying for a home loan.

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You DO NOT Have to Use 1% of the Balance

This is a common misunderstanding by inexperienced loan officers.  In most cases, you can document your payments in one of the other ways recommended above.

You only need to use a 1% calculation if you cannot obtain any other documentation showing what your payments will be once you start repayment.

Not all loan officers know the guidelines, and not all lenders follow the same guidelines.  It is possible that your loan officer does not have any experience with the guidelines, or the lender has chosen to create their own guidelines.

If a lender tells you something different than what you’ve read here, don’t be discouraged.  Not all loan officers or lenders are created equal.  Don’t take no for an answer!

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Please feel free to ask any questions below, on chat, or by email.

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About the Author

Scott Schang

A 20 year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues, and making sense of complicated real estate and mortgage topics on this website since 2007

Leave a Question or Comment About this Topic

  • Donna says:

    I have a client that is on an Income base repayment plan from 6-1-18 to 6-1-19 with a zero as her monthly payment. It says her monthly payment of 0 is first due on 6-1-18. Also, stated she is currently on a deferment or forbearance and is not responsible to make payments until the deferment or forbearance ends, which she can re apply. If she does not recertify or no long have a partial financial hardship (PFH) her payment would be most likely be $513.95. So, are we able to use the zero payment to close on a loan in May 2018, or will the lender use the $513.95 payment that showed on the letter.
    Which program would be best to put her in if I need a zero monthly payment for the student loan to make her DTI work? It looks like Freddie no longer offers the zero payment, is that correct.

    • Scott Schang says:

      This is going to be an underwriter call probably. Fannie Mae will allow this, and technically, her first payment would not be due until after the IBR payment is in effect. You’re also correct about Freddie Mac, they updated their guideline in January and no longer allow a $0 payment.

      I think you shouldn’t have any issues with this as long as you have a good relationship with your underwriter and they try to get the loan approved. If your underwriters are adverse to gray areas, it might be a challenge.

      I’m pretty confident that with documentation from the student loan lender showing the IBR starting in June that you should be ok.

      If you’re a broker, I’m positive there is an investor that will do this.

      Hope this helps?

  • Faris says:


    Me and my wife have a combined Student loan amount of roughly $129k. with a $0 IBR Non Deferred. We live in Florida. We are currently awaiting an answer form our Lender but just incase they come back with Negative news, I want to have another opinion. Is there any hope for us?

    • Scott Schang says:

      Hi Faris,

      YES! Freddie Mac changed their guidelines on January 18th, 2018 and no longer allow for $0 IBR payments. Fannie Mae conventional will allow you to use the $0 payment when calculating your debt to income ratio.

      I have a very experienced lender friend that can help in Florida. He has a lot of experience with IBR payment loans. Let me know if you would like an introduction?

      • Faris says:

        Thanks Scott! So, With Freddie Mac changing that guideline, that’s a bad thing for us right? And with Fannie we should be good?

        • Scott Schang says:

          Yes, the Freddie guideline change requires you use .50% of the loan balance as your qualifying payment when calculation debt to income. Fannie Mae conventional will accept the $0 payment with documentation showing that the loan is in repayment and not deferred.

  • Tiffany says:

    Hi, I need help from any lenders in SC. I am on the IBR plan at $0 payments a month and the loan is not deferred. Thank you.

    • Scott Schang says:

      Hi Tiffany,

      I’m going to introduce you to Jim Duffy in SC. Jim has a lot of experience with these guidelines and can help. I’ll send an email introduction shortly!

      It sounds like you’ve done your homework, and you’ll be fine with a $0 payment as long as the loan can be documented to be in a repayment status.

      Hope this helps?

  • Marquis says:

    Have a ibr pay $0 a month. Student loan74,000 went to two lenders both told me no saying because I pay $0. That they have to use the 1% from the total balance which brings my DTR sky high. Please help do you have any suggestions, I live in Va.

    • Scott Schang says:

      Hi Marquis,

      I am going to introduce you to a lender that has experience with these guidelines and can absolutely help you even with a $0 IBR payment. As long as your loans are not deferred or in forbearance, you should be ok.

      I’ll send a separate email introducing you to someone that can help!

  • Fd says:

    Hi Scott,

    Can you recommend someone in Indiana for an Ibr of zero, not deferred?

  • Kim says:

    We are 2 weeks from closing & were assured that our loan was coming through by our lender. Then, they found their original credit report was incorrect (the loans were in transition at the time it was taken) and now it’s up to the underwriter to decide if we can proceed. We are under an ibr plan. If this falls through, is there a way to stay under contract and get a loan through Freddie mac? If so how? We are in Ohio… and so frustrated with this process.

    • Scott Schang says:

      Hi Kim,

      Unfortunately, you are working with a loan officer that is not familiar with the underwriting guidelines. This is much more common than you would think. If a loan officer tells you that you are approved, it’s not. Your loan still have to get through an underwriter.

      If the loan officer made a mistake, it will be caught by the underwriter close to the end of the process. I know the timing isn’t ideal, but I assure you that your challenge is not terminal.

      There are a couple of options for using your IBR payment to qualify for a home loan. I’ve sent you an introduction to a lender friend of mine that has a lot of experience with these guidelines, and can help if the underwriter cannot figure it out.

      I think you’ll be ok. I know it’s kind of scary, but I wouldn’t panic. Hopefully they can get you back on course quickly.

      Hope this helps?

  • Melissa says:

    I also need a lender for Washington State

  • Moses says:

    I’ve applied for a mortgage using my IBR of $62 a month. My student loan is $170K. Freddie Mac underwriting denied it saying that my IBR payment should have the loan amortized in 990 months. I’ve have not heard of this rule. Is this true? Is there a work around? Since IBR will always be a small amount base on income, then I do not believe anyone with IBR will be able to be approve with freddie Mac. Please help. Orlando, Florida.

  • Pam Ezekiel says:

    My husband and I are also looking to purchase a home this summer and were told because of our IBR we did not qualify. We are in Athens,GA. Do you have any lenders in the area or Atlanta that you can suggest?

  • Joe says:

    Hi. This is great news for someone like myself on IBR payments, considering a mortgage in the near future.

    A question I have is: How do I know what lenders use the Freddie Mac guidelines? I’m in St. Joseph Missouri and I did a lot of googling, after realizing that Freddie Mac does not give out loans directly to borrowers, I tried to figure out which ones use Freddie Mac’s guidelines, and came up empty handed.

    How can I find a lender that will say “Oh, your IBR payment is on your credit report. That’s great!”?

    • Scott Schang says:

      Hi Joe,

      I can introduce you to a lender that has experience with the Freddie Mac guidelines and can help in Missouri.

      You’ll see an intro by email shortly.