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New Rules Help Borrowers With Student Loan Debt

By: Chandra Etienne, P.A., M.S.I.R.E

Student loans have been a major obstacle for many of my first-time home buyers. Fannie Mae has just announced some new solutions that will help potential buyers with existing student loan debt.

Here are the key changes:

  • Student Loan Payment Calculation: Your actual monthly payments will now be counted towards your debt-to-income (DTI) ratio. This is a major change because now it takes into account if you are in a federal reduced payment plan. For example, if your monthly payments were supposed to be $600 but now are only $150 due to an income-based payment plan, only $150 will be counted towards your DTI. Prior to this, lenders were required to calculate 1% of your student loan balance towards your monthly DTI.
  • Student Loan Cash-Out Refinance: Fannie Mae has lowered the cost of this program, allowing current homeowners with existing high interest student loan debt to “cash out” on the existing equity in their home to pay off their student loan. Parents participating in “Parent Plus” programs to pay off their kids’ student loans may potentially benefit from this as well.
  • Debt Being Paid by Others: if you have debts being paid by someone else, for example your parents pay your monthly car note, this will no longer be included in your DTI. However to qualify, the debts have to be non-mortgaged and payments paid for at least 12 months.

Thank you, Fannie Mae! These new rules are a step in the right direction and will allow many to now qualify for a home loan. However, keep in mind that borrowers must still meet Fannie’s regular credit-score and other underwriting criteria.


Chandra Etienne, P.A., M.S.I.R.E.

Chandra Etienne is a God-fearing wife, mother and entrepreneur helping others build wealth through homeownership. With 10 years of experience in real estate, loan modifications, foreclosures and short sales. Chandra brings her wealth of knowledge to assist millennials and first-time homebuyers with the homebuying process, asset management and building credit worthiness. If you would like more information on these changes visit to learn more.




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