FHA Student Loan Requirements

When you apply for an FHA loan, your student loan status will affect your ability to obtain the mortgage guaranty. This is particularly true if you have federal student debt, but all student debt will come into play on your FHA mortgage application.

Government Debt

You will need to show you have a good record of payment on any government student debt you have incurred in order to be eligible for an FHA mortgage guaranty. All payments should be made on time for at least 2 years prior to applying for the FHA loan. All debts should be in good standing, and it is best if you have never had a delinquent payment on another federal loan when applying for your FHA assistance.

Private Student Debt

Even private student debts will be considered in your home mortgage application. Your current debts, regardless of whether they are in a state of deferral or forbearance, will be counted in your debt to income ratio on your mortgage application. This ratio compares how much you earn each year in comparison to your debt obligations. When you have outstanding student debts, you will have to settle for a lower FHA mortgage guaranty because of your less favorable ratio.

Is a 401k considered when you apply for an FHA loan?

When you apply for an FHA loan, your assets will be considered against your debt to determine if you are in good financial standing. A 401k account is one type of asset, and it can help build your income-to-debt ratio. However, since a 401k is not a highly liquid asset, meaning it could not easily be turned into cash at the listed value, it will not be given as much priority as a more liquid asset. Overall, having a high balance in your 401k helps your financial profile, but it will not qualify you for an FHA loan if you do not have other assets to your name.

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