Buying a Home in San Diego With Student Loan Debt: How Lenders Count It
Student loans count as a monthly debt when you apply for a mortgage, but how a lender counts them depends on your payment status. At the time this article was written, Fannie Mae's guide let a lender use the payment on your credit report, a documented $0 income-driven payment, or 1% of the balance for a deferred loan.
The short answer
- If your credit report shows a monthly student loan payment, the lender may use it.
- For a loan in forbearance or deferment, Fannie Mae's guide allows 1% of the balance or a fully amortizing payment.
- A documented $0 income-driven payment can be qualified at $0.
- Rules differ by loan program and lender, so ask which one applies to you.
Why student loans matter to a lender
A lender adds your monthly debts and divides them by your gross monthly income to get your debt-to-income ratio. Your student loan payment is part of that total, and so is the new mortgage. If you want the basics, start with my guide to debt-to-income ratio.
Freddie Mac's homebuyer site adds that a lender may be able to leave a student loan out of the ratio in some cases, depending on how many monthly payments remain and whether the loan is in forbearance or forgiveness. It says to confirm the rules for your situation with your lender or a HUD-certified housing counselor.
How Fannie Mae's guide treats the payment
At the time this article was written, the Selling Guide listed these options:
| Your situation | What the lender may use |
|---|---|
| Credit report shows a monthly payment | That payment |
| The report's payment is wrong | The payment on your most recent student loan statement |
| Income-driven plan with a $0 payment | $0, if the lender documents the actual payment |
| Loan deferred or in forbearance | 1% of the balance, or a fully amortizing payment based on documented terms |
The guide also says a student loan with more than ten monthly payments remaining counts as debt. A loan with ten or fewer left may still be counted if it affects your ability to pay your other obligations.
A worked example
Here is a made-up buyer who earns $9,000 a month before taxes. They have a $400 car payment, and the new home would cost $3,800 a month with taxes and insurance. They owe $40,000 in student loans. This is for illustration only.
| Student loan status | Counted payment | Total monthly debts | DTI |
|---|---|---|---|
| Credit report shows a $250 payment | $250 | $4,450 | 49.4% |
| Loan deferred, lender uses 1% of the $40,000 balance | $400 | $4,600 | 51.1% |
| Income-driven plan, documented $0 payment | $0 | $4,200 | 46.7% |
The same loan can produce a DTI of 46.7% or 51.1%, depending on how it is counted. That is a gap of about 4.4 points, and it can decide which price range works.
What you can do
- Get your latest loan statements and your credit report, and compare the payments listed.
- If you are on an income-driven plan, ask your servicer for documents that show the actual payment.
- Ask your lender how it counts deferred or forbearance loans before you shop.
- Keep your credit in good shape. Freddie Mac says keeping credit utilization at or below 10% can help raise a score.
- Do not change your repayment plan just before you apply, unless your lender says it helps.
A lower score affects loan terms too. See my guide on buying with a lower credit score.
What this guide cannot promise
Student loan programs change often, and I am not able to advise you on repayment plans or forgiveness. Fannie Mae's rules apply to loans it buys, and other loan types and lenders can count the payment differently. Your lender can run your exact numbers.
My advice for San Diego buyers
- Collect your student loan statements before you meet a lender.
- Ask how the lender counts deferred and income-driven loans.
- Check that the payment on your credit report is correct.
- Estimate your DTI with two different payment methods and compare.
- Talk to a HUD-certified housing counselor if you are unsure.
A note on advice
I am a REALTOR®, not a lender, attorney, tax professional or financial advisor, so this guide is general information. Your lender can tell you what you qualify for, and a CPA or attorney can answer tax and legal questions.
Call or text me at (619) 402-4614 or send me a message.
Call or text (619) 402-4614Contact Trevor LandressRelated guides
- Debt-to-Income Ratio Explained: What Lenders Look at When You Buy in San Diego
- Buying a Home in San Diego With a Low Credit Score: What Your Options Are
- Self-Employed Home Buyer Guide for San Diego: How Lenders Verify Your Income
- Gift Funds for a Down Payment in San Diego: Who Can Give and What Lenders Require
- How to Get Preapproved for a Mortgage in San Diego: What Lenders Check and What the Letter Means
- How Much Down Payment Do You Need to Buy a Home in San Diego?
Frequently asked questions
Do student loans count against me when I buy a home?
They count as a monthly debt in your debt-to-income ratio, but how the payment is counted depends on your repayment status and the lender.
What if my student loans are deferred?
At the time this article was written, Fannie Mae's guide let a lender use 1% of the outstanding balance or a fully amortizing payment based on documented terms.
Can an income-driven plan with a $0 payment count as $0?
Fannie Mae's guide allows it if the lender documents that the actual monthly payment is $0.
Can a lender leave out my student loan?
Freddie Mac says a lender may be able to exclude it in some cases, depending on the remaining payments and whether the loan is in forbearance or forgiveness.
Who can confirm the rules for me?
Your lender or a HUD-certified housing counselor can confirm how your loan will be counted.
About the author
Trevor Landress is a San Diego REALTOR® with Coldwell Banker West (DRE# 02126901). He was born and raised in San Diego and has been licensed since 2021.
Trevor helps homeowners sell, guides first-time buyers through the home buying process and assists investors with their next acquisition. His work includes negotiating offers, analyzing market trends, building pricing strategies and running marketing campaigns for his listings.
He serves clients across San Diego County, from coastal communities like La Jolla, Del Mar and Carlsbad to neighborhoods inland.
Trevor is part of the Campbell Group, a three-generation real estate team, and he and the Campbell Group consistently rank as a top producing team at Coldwell Banker West each month. He writes these guides to help San Diego buyers and sellers navigate an ever-changing market. To talk through your plans, call or text (619) 402-4614 or contact Trevor Landress.
How I help San Diego home buyers
I help buyers sort out their budget, understand their loan options with a lender, search for homes, write and negotiate offers, keep track of inspection and contingency deadlines and stay organized through closing.
How I help San Diego home sellers
I help sellers price their home, prepare it for the market, market it to buyers, review and negotiate offers and manage the steps from an accepted offer to closing.
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