January 8th 2016
‘First-time buyers with student loans will face tougher challenges getting a mortgage’
By: York Real Estate Group
Some new changes in how the Federal Housing Administration determines a prospective buyer’s debt-to-income (DTI) ratio will make it more difficult for first-time buyers with outstanding student loans to get a low down payment mortgage.
A DTI ratio above 43% is considered to be in the high-risk category for defaulting on a mortgage. Prior to September, the FHA did not count loans that had been in deferment for a year or longer when making this determination.
The intent of the new rules, according to FHA spokesman Brian Sullivan, is not punitive but rather to put buyers "on a path of sustainable homeownership rather than being placed into a financial situation they can no longer afford once their student debt deferment expires. Deferred student debt is debt all the same and really must be counted when determining a borrower's ability to sustain both student debt payments and a mortgage over the long haul," he said.
Currently 43 million Americans carry $1.2 trillion in student loan debt, with the average balance around $30,000 resulting in a $600 monthly payment. The numbers are truly staggering. But lawmakers’ decision to make it harder for a generation of new homebuyers to get a decent loan is a risky proposition at best, and more likely stands to have devastating long-term consequences.
If you have any questions about your DTI, or anything else related to buying or selling, just give us a call, and we’ll take a look at your options together.
Real Estate News Blog: www.YorkRealEstateGroupSWFL.com
York Real Estate Group consists of James, Michael, and Morgan York, Florida Realtors with Downing-Frye Realty. James York is the winner of the prestigious 2014 and 2015 SWFL People’s Choice Realtor Award. The group has over 25 years combined experience and over $250 million in sales transactions. Visit The York Group website at www.naplesyorkrealestate.com for all current MLS listings of houses for sale in Naples, Marco, Bonita, and Estero. If you have other questions, the Yorks invite you to email or call them at JYorkinFL@cs.com or 239-273-6727.