Sunday, June 15, 2014

Student Loans and how they effect Kentucky USDA Rural Housing Loan Approvals.

Kentucky Rural Housing USDA Student Loan Guidelines are as follows:
The Rule: AN 4699 - student loans are long term debt obligations and must be included in the debt ratio per section 1980.345.  This is different than FHA loans whereas if you can prove if they are deferred for the next 12 months then you don't have to include in the debt to income rations for maximum loan pre-approval limits.
The requirements:  A credit report alone will no longer satisfy proof of payment.  Due to the variety of student loan terms available, we are now required to verify the payment type with a letter from the servicer, online account verification or other official document that provides the following terms of each student loan:
  • term of loan
  • type of loan (Graduate payment, fixed payment, income based repayment, balloon note, etc)
  • rate
  • payment amount - must show highest possible if not a fixed payment
  • Account number to match credit report
  • account holder information
Payment to be used in DTI: The highest payment for the type of loan.  If a Graduated Payment or Income Based, highest payment will be used per USDA guidance.  Deferred loans must be included in DTI and can never be excluded.  


Joel Lobb
Senior  Loan Officer

American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223

 phone: (502) 905-3708
 Fax:     (502) 327-9119

 Company ID #1364 | MB73346