Caliber Home Loans, Inc. created this handy checklist, so you can skip study hall.
Greater of 1% of balance, monthly payment per the credit report or fully amortized documented payment.
Lender must include a monthly payment in the borrower’s recurring monthly debt obligation, using one of the options below to determine this amount:
- 1% of the outstanding balance;
- the actual payment listed on the credit report;
- a calculated payment that will fully amortize the loan(s) based on the documented loan repayment terms.
- Loans that are deferred or in forbearance with no documentation require that 1% of the balance be considered when qualifying.
- If the borrower is on an income-driven payment plan, obtain student loan documentation to verify the actual monthly payment is $0 to qualify the borrower with a $0 payment.
If the borrower is on an income-driven payment plan, obtain student loan documentation to verify the actual monthly payment is $0 to qualify the borrower with a $0 payment.
If in repayment, deferment or forbearance use the greater of:
- Monthly payment amount on the credit report;
- 0.5% of the outstanding balance per the credit report.
For student loan forgiveness, cancellation, discharge and employment-contingent repayment programs, payment may be excluded if:
- Loan has fewer than 10 monthly payments remaining
- Monthly payment is deferred or in forbearance AND borrower currently meets requirements for student loan forgiveness, cancellation, discharge or employment-contigent repayment program.
- A permanent, amortized fixed payment may be used, on a fixed-rate loan, in the debt ratio.
- On non-fixed-rate loans, payments for deferred loans, income-based repayment, graduated, adjustable, and other types of repayment agreements, which are not fixed-rates, can’t be used in the total debt ratio calculation.
- 1% of the loan balance must be used as the monthly payment, as reflected on the credit report.
Omit if deferred>= 12 months. If not, greater of documented payment or payment at 5% rate on unpaid balance over 12 months.