Deferred student loans count on FHA, USDA and Conventional loans, even while you pay $0. VA can leave them out. Deferment is a pause where no payment is due for a set time, and since the pause ends, each agency puts a placeholder payment into your debt-to-income ratio (DTI), the house payment plus monthly debts divided by gross monthly income. That placeholder is usually smaller than buyers fear, and paperwork from your servicer can shrink it.
Why a deferred loan still counts
A mortgage runs 30 years, and a deferment usually runs months. The agencies don't want a buyer approved on a budget that changes the day the pause ends, so they assign a payment now. It's a percentage of the balance, and the percentage differs by program.
Program by program
| Program | How a deferred loan counts | Counted on $60,000 |
|---|---|---|
| FHA | 0.5% of the balance | $300 a month |
| Conventional (Fannie Mae) | 1% of the balance, or a payment that pays off the loan under your documented repayment terms | $600 a month, or the documented payment |
| VA | Left out if deferred at least 12 months past closing, otherwise 5% of the balance divided by 12 | $0, or $250 a month |
| USDA | 0.5% of the balance | $300 a month |
FHA. HUD's rule covers every student loan, whether it's in repayment, deferred or in forbearance. When the payment shows as $0, the lender uses 0.5% of the outstanding balance.
Conventional. Fannie Mae uses 1% of the balance for deferred loans or loans in forbearance, or a fully amortizing payment figured from your documented repayment terms. That second option can come in lower when your servicer shows the terms.
VA. Written proof that the loans will stay deferred at least 12 months past the closing date takes them out of the ratio. Otherwise the lender uses 5% of the balance divided by 12, unless a statement from your servicer shows the actual payment terms and a lower payment.
USDA. USDA's handbook matches FHA. Whatever the loan's status, the lender uses the reported or documented payment when it's above $0, and 0.5% of the balance when it's $0.
A worked example with $60,000 deferred
Morgan earns $4,500 a month gross and has $250 a month in other debts: a $190 car payment and $60 in card minimums. Morgan also has $60,000 in student loans in deferment.
| Program | Student loan counted | Total debts | Most house payment the debt ratios allow |
|---|---|---|---|
| FHA (56.9% total) | $300 | $550 | $2,010.50 |
| Conventional (50% total) | $600 | $850 | $1,400.00 |
| VA, deferred 12+ months past closing (41% guideline) | $0 | $250 | $1,595.00 |
| VA, deferred less than that (41% guideline) | $250 | $500 | $1,345.00 |
| USDA (41% total) | $300 | $550 | $1,295.00 |
The math is the limit times $4,500, minus total debts. On FHA, 56.9% of $4,500 is $2,560.50, and $2,560.50 minus $550 leaves $2,010.50. That's below FHA's separate housing limit of 46.9%, or $2,110.50, so total debt is the limit. VA's 41% is a guideline, and VA approves above it when residual income, the money left over each month after taxes, debts, the house payment and upkeep, comes in at least 20% above VA's table.
At a 5.75% rate on a 30-year fixed with FHA 100% financing, property tax at 0.95% a year and $283 a month for insurance, Morgan's FHA price is about $248,000. Take away the $300 student loan figure and it rises to about $262,000, where the housing limit takes over. On FHA, the placeholder is worth about $14,000 of buying power, and Conventional's $600 figure uses up twice as much monthly room.
How to lower the counted payment
Get a documented payment. An income-driven repayment plan sets your payment from your income and family size. FHA and USDA use any documented payment above $0 instead of 0.5% of the balance, and a payment of $85 counts as $85. Conventional can count a documented $0 income-driven payment as $0.
Get the paperwork before you apply. Credit reports often show $0 or the wrong amount. A current letter or statement from your servicer showing the plan and the payment lets the lender use the real number.
Ask your servicer about the deferment end date. For a VA buyer, a letter showing the deferment runs at least 12 months past closing takes the loans out of the ratio entirely. When it ends sooner, a servicer statement with your actual payment can still beat VA's 5% figure.
Add a co-signer. A parent or grandparent's income counts with yours, even on Social Security or SSI, and they don't go on the title or live in the home. The co-signer calculator shows what one adds.
The student loans and DTI guide goes further into income-driven plans and forbearance. Put your balances into the student loan DTI calculator to see the counted payment on every program side by side. Then call AAA Capital Funding at 888-601-8344 with your servicer statements in hand, and we'll tell you which program counts your loans lowest.