Kentucky VA Mortgage Guidelines for Student Loan Payments

Clarification and New Policy for Student Loan Debts and Obligations

 1. Purpose. The purpose of this Circular is to clarify and explain new policy regarding
student loans for the underwriting of Department of Veterans Affairs (VA) guaranteed home
loans.

 2. Background. The policy in the Lender’s Handbook- VA Pamphlet 26-7, chapter 4, section 5,
paragraph G will now be titled Student Loans. The clarification will apply to deferred student
loans and the new policy will provide guidance for student loans in repayment or, to begin
repayment within 12 months of a VA loan closing. Student loans under certain repayment plan
types are described at studentaid.ed.gov. This policy applies to all student loan repayment types.

 3. How to Calculate a Student Loan Monthly Payment.

 a. If the Veteran or other borrower provides written evidence that the student loan debt will be
deferred at least 12 months beyond the date of closing, a monthly payment does not need to be
considered.
 b. If a student loan is in repayment or scheduled to begin within 12 months from the date of
VA loan closing, the lender must consider the anticipated monthly obligation in the loan
analysis and utilize the payment established in paragraph (1) or (2) below. Calculate each loan
at a rate of 5 percent of the outstanding balance divided by 12 months (example: $25,000
student loan balance x 5% = $1,250 divided by 12 months = $104.17 per month is the monthly
payment for debt ratio purposes).

 (1) The lender must use the payment(s) reported on the credit report for each student loan(s) if
the reported payment is greater than the threshold payment calculation above.
 (2) If the payment reported on the credit report is less than the threshold payment calculation
above, the loan file must contain a statement from the student loan servicer that reflects the
actual loan terms and payment information for each student loan(s). The statement(s) must be
dated within 60 days of VA loan closing and maybe an electronic copy from the student loan
servicer’s website or a printed statement provided by the student loan servicer. It is the
lender’s discretion as to whether the credit report should be supplemented with this information

Joel Lobb (NMLS#57916)
Senior  Loan Officer

American Mortgage Solutions, Inc.

10602 Timberwood Circle Suite 3

Louisville, KY 40223

Company ID #1364 | MB73346

Text/call 502-905-3708
 kentuckyloan@gmail.com

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916 http://www.nmlsconsumeraccess.org/

-- Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

VA Student Loans for Kentucky Mortgage Loan Approval

 Kentucky VA Student Loans

Did you know that VA has a new policy for calculating student loan payments?

Considering the Payment:

• If the student loan repayments are to begin within 12 months of closing, the debt will be considered.
  

• If the student loan payment is being deferred for a period longer than 12 months after closing, the debt does not need to be considered.

Calculating the Payment:

• Calculate each loan at a rate of 5% of the outstanding balance then divide that by 12 months.

            Example: $25,000 x 5% = $1,250 divided by 12 months is $104.17 per month.

• If the student loan payment reported on the Borrower’s credit report is greater than the calculated payment, then the credit report payment will be used.
  

• If the payment reported on the credit report is less than the calculated amount, the lender must require a statement (dated within 60 days of closing)  from the student loan servicer that reflects the actual terms and payment information for each student loan.
  

• If the student loan payment is in an Income Based Repayment Plan and the current payment is documented to continue for at least 12 months after closing, the lender may use the IBR amount. If the payment is not expected to continue for at least 12 months after closing, a monthly statement is required. If a statement is not available, the calculation of 5% of the balance, divided by 12 will be used.
  

Documentation for payments and 12 months continuance will be required

For more Information see VA Circular 26.17.02 dated 1/23/17

Kentucky VA Mortgage Requirements for Bankruptcy, Foreclosure, Collections and Student loans.

Bankruptcy VA Mortgage Loan Requirements

Chapter 7 : 2 years from discharge date

•Chapter 13: No seasoning required if discharged. If open requires court approval and 0x30 last 12 months to trustee.


Borrower must demonstrate re-established credit since dismissal from Bankruptcy.

Judgments VA Mortgage Loan Requirements


•Judgments must be paid or in a repayment plan for 12 months with a most recent 0x30x12 timely payments.

Student Loans VA Mortgage Loan Requirements

•Monthly payment does not need to be considered if the Veteran or borrower provides written evidence that the student loan debt will be deferred at least 12 months beyond the date of closing

•Use payment shown on credit report (unless credit report reflects $0 or no payment amount).
Use Balance x 5% / 12 for payment

Foreclosure and VA Mortgage Loan Requirements

•Foreclosure - 2 years removed from sale date of home


Collection Accounts and VA Mortgage Loan Requirements

•Collection and charge-offs are generally not required to be paid off, however follow Desktop Underwriting Findings through Fannie Mae  DU or Freddie Mac LP Findings automated underwriting systems if payoff is required.

•A letter of explanation is required for all collection/charge-off/judgment accounts.

•Collections and charge offs must be included in DTI at the amount on credit or 5% of balance if no payment shown.

•Borrowers with a history of collection/charge-off accounts should have re-established a 12 month satisfactory credit history.

 

Joel Lobb (NMLS#57916)
Senior  Loan Officer

 

American Mortgage Solutions, Inc.

10602 Timberwood Circle Suite 3

Louisville, KY 40223

Company ID #1364 | MB73346

 

Text/call 502-905-3708
kentuckyloan@gmail.com

 

 

If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

-- Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.