Unlike FHA loans, USDA zero down loans don’t allow student loan payments which are about to be deferred, to be eliminated from the monthly payment obligation. (Remember, with FHA loans, if a borrower’s student loan payments can be deferred for 12 months, they can be kept out of the debt-to-income calculation.)
However, if a Borrower’s Student loan pmts are already deferred and there are PRESENTLY NO MONTHLY PAYMENTS BEING MADE, then USDA will allow the Underwriter to use 1% of the balance as the payment obligation for debt-to-income calculations.

4 Responses to “USDA Zero Down rules on Deferred Student Loans”
  1. Rachelle Smith says:

    Does it matter whether the student loans are on time or not?

    • Administrator says:

      not in terms of deferment. But if they are consistently late, your score might take a hit and you may not get approved.

  2. Gliaza Soria says:

    I cosigned for my nephew on his student loan and he makes the payments. I remember when I applied for a mtg in 2009 the Loan officer told me he couldn’t just ignore that. Is this true?? What if I provided proof I don’t make the payments?

  3. Administrator says:

    The rule is that if the Note is JOINT (i.e your nephew was on the loan with you) and he/she can provide proof of 12 mos payments, typically our Underwriter would eliminate the pmt.

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