Can You Buy a House With Student Loan Debt?

A buyer can owe a substantial student-loan balance and still qualify for a mortgage. Another buyer with a smaller balance can struggle if the required monthly payment consumes too much qualifying income. Mortgage underwriting focuses on the payment calculation, not the balance by itself.

The complication is that Fannie Mae, Freddie Mac, and FHA do not always use the same payment when a loan is deferred, in forbearance, or reporting a $0 income-driven payment. Choosing the right mortgage begins with documenting the actual loan status and comparing the program rules.

How student loans affect mortgage qualification

The qualifying student-loan payment is added to the proposed housing payment and other recurring obligations. That total is divided by gross qualifying income to calculate the debt-to-income ratio, commonly called DTI.

A higher required student-loan payment raises DTI and can reduce the mortgage payment or purchase price the borrower qualifies for. A lower documented payment may improve the calculation, but the final decision also depends on credit, income, assets, reserves, property, program eligibility, and automated or manual underwriting.

What if the credit report shows the correct monthly payment?

Under current Fannie Mae guidance, the lender may use the monthly student-loan payment shown on the credit report. When the credit report is inaccurate, the lender may use the payment documented on the borrower’s most recent student-loan statement.

FHA similarly permits the payment reported on the credit report or an actual documented payment when the amount is above zero. If the lender uses an amount below the credit-report payment, FHA requires written documentation of the actual payment, payment status, outstanding balance, and terms from the creditor or servicer.

How Fannie Mae treats a $0 income-driven payment

Fannie Mae updated its Selling Guide on August 5, 2026. If a borrower is enrolled in an income-driven repayment plan and the required payment is actually $0, the lender may obtain student-loan documentation verifying that amount and qualify the borrower using a $0 payment.

This treatment is specific to a documented income-driven repayment plan. A credit report that merely displays zero is not enough by itself. The lender must determine why the payment is zero and apply the appropriate rule.

How Fannie Mae treats deferment or forbearance

A deferred loan or a loan in forbearance is not treated the same as a verified $0 income-driven payment. Current Fannie Mae guidance allows the lender to use either:

• 1% of the outstanding student-loan balance, or
• A fully amortizing payment calculated from the documented repayment terms.

Because the assumed payment can be material, buyers should not rely on the $0 shown on a credit report when the loans are temporarily paused.

How Freddie Mac treats student loans

Freddie Mac’s current guide requires an amount greater than zero to be included in DTI for student loans, including loans in an income-driven plan. When the credit report shows a $0 payment, the lender may use other documentation in the mortgage file to determine the qualifying amount.

Freddie Mac also describes limited circumstances in which a student-loan payment may be excluded, such as documentation showing the debt has ten or fewer monthly payments remaining or will be forgiven, canceled, discharged, or paid in full under specified conditions. The evidence must satisfy the guide, not simply reflect a borrower’s expectation.

How FHA treats a $0 reported payment

FHA requires outstanding student loans to be considered regardless of payment status. Under HUD’s current policy, the lender uses:

• The reported or documented actual payment when it is above zero, or
• 0.5% of the outstanding balance when the reported monthly payment is zero.

The payment may be excluded when written documentation shows the balance has been forgiven, canceled, discharged, or otherwise paid in full. A future possibility of forgiveness is not the same as completed, documented forgiveness.

Why the same balance can produce different mortgage calculations

Consider $80,000 in student loans with a $0 payment on the credit report. The following examples illustrate why the loan status and mortgage program matter:

• A verified $0 income-driven payment may be entered as $0 under current Fannie Mae guidance.
• A Fannie Mae loan in deferment or forbearance may use $800 per month, which is 1% of the balance, or a documented fully amortizing payment.
• FHA would use $400 per month, which is 0.5% of the balance, when the reported payment is zero.
• Freddie Mac requires a payment above zero and applies its own documentation and calculation rules.

These are guideline examples, not approval outcomes. A lender may also have additional requirements, and the borrower must qualify for every other element of the mortgage.

What documents should a buyer gather?

A complete student-loan review may require more than the credit report. Gather:

• The most recent statement for every student loan
• Current balance, required payment, and repayment status
• Documentation of an income-driven repayment plan
• Evidence showing whether the payment will change and when
• Deferment or forbearance terms, if applicable
• Documentation for forgiveness, cancellation, discharge, or payoff when completed
• Payment history when another person has been paying an obligation

Include those records with the broader mortgage preapproval document checklist. A screenshot showing only the balance may not establish the payment or repayment status.

What if a parent or another person pays the loan?

Being legally responsible for the debt usually means it must be considered unless the program provides a documented exception. Fannie Mae, for example, may exclude certain non-mortgage debts paid by another party when the lender obtains the most recent 12 months of canceled checks or bank statements from that party showing a consistent history with no delinquent payments.

An informal promise that a parent will make future payments is not the same as the required payment history. Co-signed and Parent PLUS loans should be reviewed individually based on legal responsibility, credit reporting, payment history, and program rules.

Should you change repayment plans before applying?

Do not change a federal or private student-loan repayment plan solely because one monthly number appears better for a mortgage. A change can affect total interest, repayment duration, capitalization, forgiveness progress, required recertification, and future payments.

First ask the mortgage loan officer which payment the proposed program must use. Then discuss repayment consequences with the loan servicer and, when appropriate, a qualified student-loan or financial professional. The best mortgage calculation is not automatically the best long-term student-loan decision.

Five steps before house hunting

1. Review every student loan on the credit report.
2. Download current statements and repayment-plan documentation.
3. Confirm the payment each eligible mortgage program would use.
4. Calculate DTI using the full housing payment, not principal and interest alone.
5. Build the down payment, closing-cost, and reserve plan around the resulting budget.

A thorough mortgage preapproval can test those calculations before a buyer becomes responsible for contract deadlines.

Sources

• Fannie Mae Selling Guide: Monthly Debt Obligations
• Freddie Mac Seller/Servicer Guide: Monthly debt payment-to-income ratio
• U.S. Department of Housing and Urban Development: FHA student-loan payment calculation
• Fannie Mae Selling Guide: Debt-to-Income Ratios

This article is for general educational purposes and is not legal, tax, credit, student-loan, or individualized financial advice. Student-loan calculations, documentation, program availability, lender requirements, and underwriting results vary. All loans are subject to approval. Equal Housing Lender.