Per FHA Mortgagee Letter 21-13, HUD has updated the guidance on Student Loans as follows:

Calculation of Monthly Student Loan Obligations

  • Regardless of payment status, the following must be used for qualifying purposes.
    • The payment amount reported on the credit report or the actual documented payment, when the payment amount is above zero; or
    • 0.5 percent of the outstanding loan balance, when the monthly payment reported on the Borrower’s credit report is zero.
  • Payment may be excluded from the Borrower’s monthly debt calculation where written documentation from the student loan program, creditor, or student loan servicer indicates that the loan balance has been forgiven, canceled, discharged or otherwise paid in full.

This guideline update is effective immediately.

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