Mortgages: Buying a Home with High Student Debt

The DTI Hurdle

When applying for a mortgage, underwriters look at your Debt-to-Income (DTI) ratio. Massive student loan balances concern underwriters because they signal that you might not be able to afford the monthly mortgage payment if repayment resumes or spikes.

How FHA, Fannie Mae, and Freddie Mac Calculate Your Loans

Lenders do not care about the total balance; they care about the monthly liability. Here is how they calculate it in 2026:

• Conventional Loans (Fannie/Freddie): If you are on an IDR plan, the lender can use your actual IDR payment (even if it is $0). If you are in deferment or forbearance, they typically hit you with 1% of the total loan balance as your estimated monthly liability.
• FHA Loans: FHA rules now allow lenders to use your actual documented monthly IDR payment. If your payment is $0, FHA requires lenders to calculate 0.5% of the total outstanding balance to use in the DTI formula.

If you want to buy a house, make sure your IDR is fully updated and documented exactly 60 days before applying for pre-approval.