Fannie Mae Eases the Burden on Home Buyers & Owners with Student Debt

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Fannie Mae Eases the Burden on Home Buyers & Owners with Student Debt

Kenneth R. Harney

Washington Post
May, 6th 2017

Here's some good news for home buyers and owners burdened with costly student loan debts: Mortgage investor Fannie Mae has just made sweeping rule changes that should make it easier for you to purchase a first home or do a "cash-out" refinancing to pay off your student debt.

Fannie's new policies could be game changers for large numbers of consumers. Roughly 43 million Americans are carrying student debt -- $1.4 trillion nationwide -- according to industry estimates. These not only are a drag on borrowers' ability to save money, but are a key reason why so many young, would-be home buyers remain renters -- or are camped out in their parents' homes.

There are three big changes that Fannie has made that could affect you:

If you're one of the 5 million-plus borrowers who participate in federal reduced-payment plans on your student loan, your actual monthly payments, as reported to the credit bureaus, will count toward your debt-to-income (DTI) ratio calculations. If your payments were originally supposed to be $500 a month but you've had them reduced to $100 through an "income-based repayment" plan, only the $100 will be added to your monthly debts for DTI purposes.

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