HUD Issues Student Loan Payment Letter to Mortgage

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June 18 HUD published Letter to the mortgagee 2021-13which provides updated data on the calculations of monthly student loan payments to offer broader access to affordable FHA-insured single-family mortgage financing for creditworthy individuals with student loan debt. According to HUD, the revised policy aligns the FHA student loan debt settlement policy more closely with other housing agencies, further helping to clarify the origins for borrowers with student loan obligations. The updated policy removes the current requirement “that lenders calculate a monthly student loan payment of one percent of the outstanding student loan balance for student loans that are not fully repaid or repaid.” According to HUD, the updated policy “bases the monthly payment on actual student loan payment, which is often lower, and helps homebuyers with student debt meet the minimum requirements for an FHA-insured mortgage.”

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