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HUD issues mortgagee letter on student loan payments
On June 18, HUD issued Mortgagee Letter 2021-13, which provides updates to its student loan monthly payment calculations to offer greater access to affordable single family FHA-insured mortgage financing for creditworthy individuals with student loan debt. According to HUD, the revised policy more closely aligns FHA student loan debt calculation policies with other housing agencies, which further helps clarify originations for borrowers with student loan debt obligations. The updated policy eliminates a current requirement “that lenders calculate a borrower’s student loan monthly payment of one percent of the outstanding student loan balance for student loans that are not fully amortizing or are not in repayment.” According to HUD, the updated policy “bases the monthly payment on the actual student loan payment, which is often lower, and helps home buyers who, with student debt, meet minimum eligibility requirements for an FHA-insured mortgage.”