Saturday, September 26, 2015

Kentucky USDA Rural Housing Guidelines for Income Based Repayments and Deferred Student Loans

Kentucky USDA Rural Housing Guidelines for Income Based Repayments and Deferred Student Loan

Kentucky Rural Housing USDA Loan Requirements for Student Loans has been updated  May 1st, 2015:

New Guidelines

Student loans. Lenders must include the greater of one percent (1%) of the outstanding loan balance or the verified fixed payment as reflected on the credit report.
Exception: Monthly payment amounts listed on the credit report, which are less than one percent of the outstanding balance may be used when evidence from the loan servicer is obtained indicating;
1)the applicant is on a fixed repayment plan not subject to change under the terms of the current agreement and
2) and the monthly payment amount due. Fixed payments have a monthly amount that is not subject to change through the fixed repayment time frame.
Income Based Repayment (IBR) plans, graduated plans, adjustable rates, interest only and deferred plans are examples of repayment plans that are subject to change and do not qualify for the exception.
No additional documentation is required if a credit report is obtained and the lender can confirm the payment represented is a fixed payment as noted in this paragraph.

Old Guidelines

Kentucky Student Loans for  Income Based Repayments and Deferred loans Student loans are long term liabilities that must be included in the debt ratio calculation per RDInstruction 1980-D, section 1980.345(c).  

Because some student loans are not on fixed payment plans, the repayment amount due may increase or decrease without regard to additional liabilities incurred by the borrower.

Deferred student loans that are not in repayment status must use an estimated payment of 1% of the loan balance, or a verified fixed payment provided by the loan servicer to document the payment that will be due. 

Student Loans: Income Based Repayment (IBR):• IBR amounts are not fixed payments and may increase annually.• IBR payments of $0 are not eligible to be used in the debt ratio.

When an applicant provides documentation of an IBR agreement and payment from the loan servicer the following apply:1. If the IBR payment is less than $100 and 1% of the total loan balance is more than $100, a minimum payment of $100 must be included in the debt ratios.2. If the current IBR payment is over $100, lenders may use that payment amount in the debt ratios. 

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell