Do Mortgage Lenders Count Deferred Student Debt?

September 19, 2000, Reviewed January 28, 2011

"When determining whether a borrower's income is large enough to meet expenses, will a lender include in expenses student debt on which the payment is deferred"?

In qualifying loan applicants, lenders generally apply a maximum ratio of total housing expense-to-income, often 36%. The housing expense includes the payments on other debts of all kinds, including student loans.

The general rule is that deferred payments will be included as an expense if they begin within the first year of the mortgage. If the payments are deferred more than a year, they won't be counted unless the amount involved is very large, or the borrower's credit is weak. This is a judgment call on the part of the underwriter.

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