Every loan program counts student loans in your debt-to-income ratio, but each counts them differently. A real payment on your credit report usually counts. When the report shows $0, FHA, USDA and Freddie Mac count 0.5% of the balance, while Fannie Mae can use a documented $0 income-driven payment or 1% of the balance, and deferred loans still count on FHA, USDA and Fannie Mae. On a $40,000 balance, that’s the difference between $0 and $400 a month.
Example terms: a $427,500 Conventional 30-year fixed loan (5% down on a $450,000 purchase) at 7.490% interest, 7.880% APR, is repaid in 360 monthly payments of $2,986.22 for principal and interest. Payments do not include taxes and insurance premiums, so the actual payment obligation will be greater. Monthly mortgage insurance is added until it is removed. Includes 0.026% in discount points ($111). Purchase of a $450,000 single-family primary residence in Chesterfield County, Virginia; 740 credit score; 30-day rate lock; debt-to-income under 43%. Loan amounts are base loans; where an upfront FHA premium or VA funding fee is financed, it is added on top and the payment is figured on the total. Payments are principal and interest only. Terms as of November 9, 2026. Other numbers on this page are illustrations, not offers. Any rate shown on this site is an example. Rates may change or may not be available at the time of loan commitment or lock-in. More example terms and APR.
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- Can I buy a house with student loans?
- Do student loans affect your debt-to-income ratio?
- How each loan program counts student loans
- Deferred student loans and a mortgage
- Income-driven repayment and a $0 IBR payment
- One $40,000 loan, counted five ways
- How picking the right program changes the counted payment
- What to gather before you apply
Student loans are one of the biggest reasons people assume they can’t buy a house, and they’re wrong more often than not. Your student loans count in your debt-to-income ratio for a mortgage, but how much they count depends on the loan program you use, and on the same balance the difference can be hundreds of dollars a month. Here are the rules for each program, a worked example, and how picking the right program changes the number.
Can I buy a house with student loans?
Yes. In my files, student loans in good standing are not a reason for a no. They’re a monthly payment, and the only real question is how big a payment the lender counts.
What does stop a file is a federal student loan in default. Federal law bars FHA, VA and USDA loans to anyone with a delinquent federal debt until the delinquency is resolved, so a defaulted loan has to be resolved before we go further. And old late payments on student loans can hold your score down long after everything else is fixed.
Do student loans affect your debt-to-income ratio?
Yes. Your debt-to-income ratio is every monthly debt payment, including the new house payment, divided by your gross monthly income. A student loan is one of those payments, even when you aren’t paying anything on it today. The full mechanics, and how much room the ratio leaves you, are on how much house you can afford.
Here’s why the counted number matters. At an example rate of 6.5% on a 30-year fixed loan, with a small down payment and Chesterfield County taxes, every $100 a month of counted debt is roughly $13,500 to $14,000 of home price you can’t qualify for. So a student loan counted at $400 instead of $0 can cost you about $55,000 of buying power.
How each loan program counts student loans
Each loan program counts student loans differently, including loans in deferment, forbearance or an income-driven plan. These are the program rules as of November 2026.
| Program | Your report shows a payment | Your report shows $0, including income-driven plans | Deferred or in forbearance |
|---|---|---|---|
| Conventional, Fannie Mae | That payment, or the one on your latest statement if the report is wrong | A documented $0 income-driven payment can count as $0. Otherwise 1% of the balance or a fully amortizing payment | 1% of the balance or a fully amortizing payment |
| Conventional, Freddie Mac | That payment | 0.5% of the balance, income-driven plans included, unless your file documents a payment above $0 | I confirm Freddie Mac’s current rule with the lender on your file |
| FHA | That payment, or your documented actual payment if it’s above $0 | 0.5% of the balance | Still counted, at 0.5% of the balance when the report shows $0 |
| VA | The higher of that payment or 5% of the balance divided by 12. A lower payment on a servicer statement dated within 60 days of closing can be used if it continues at least 12 months past closing | 5% of the balance divided by 12, unless a documented lower payment qualifies. Whether a documented $0 can count as $0 varies, so I check it with the lender | Not counted if deferred at least 12 months past closing, with proof; otherwise counted. VA’s exception is written for deferment, so plan on a loan in forbearance counting |
| USDA | That payment, or your documented actual payment if it’s above $0 | 0.5% of the balance | Still counted, at 0.5% of the balance when the report shows $0 |
A fully amortizing payment is the payment that would pay the loan off on its documented terms. On Fannie Mae the lender chooses between the options, and the 1% option can come out lower. And note VA’s math: 5% of the balance is a yearly figure divided by 12, not a 5% monthly payment.
Deferred student loans and a mortgage
Deferred doesn’t mean invisible. On FHA and USDA, every student loan counts no matter its status, and a deferred loan showing $0 on your report is counted at 0.5% of the balance. On Fannie Mae, a deferred or forbearance loan counts at 1% of the balance or a fully amortizing payment.
VA is the program where deferment can help most. A loan deferred at least 12 months past your closing date, with proof from the servicer, isn’t counted at all. A veteran with a stack of deferred loans can see the ratio move a lot from that one rule, so it’s worth getting the deferment letter early.
Income-driven repayment and a $0 IBR payment
This is where the rules surprise people. If your income-driven plan payment is $0, Fannie Mae can count it as $0 with your servicer’s documentation. FHA, USDA and Freddie Mac can’t: when your report shows $0, they count 0.5% of the balance instead.
That creates an odd result on those three programs. A $50 income-driven payment counts as $50, because it’s above zero. A $0 payment on a $40,000 balance counts as $200. On FHA, USDA and Freddie Mac, a small real payment can count for less than no payment at all.
Moving from a standard plan to an income-driven plan can raise your buying power too, because on most programs the lower required payment is what gets counted, as long as it stays above $0 on FHA, USDA and Freddie Mac. On VA, an income-driven payment needs evidence that the plan will continue at least 12 months past closing. A $200 payment that drops to $50 frees $150 a month, roughly $20,000 of home price at an example rate of 6.5%. The trade-off is real: a lower payment usually means paying for much longer. That’s a decision about your student loans, so make it with your servicer, and tell me before your payment changes so I’m counting the right number.
One $40,000 loan, counted five ways
Same borrower, same balance, different programs and situations:
A $40,000 student loan with $0 showing on the credit report (hypothetical)
| Fannie Mae, documented $0 income-driven payment | $0 a month | |
| VA, deferred 12+ months past closing, with proof | $0 a month | |
| VA, 5% of the balance divided by 12 | $167 a month | |
| FHA, USDA or Freddie Mac, 0.5% of the balance | $200 a month | |
| Fannie Mae, deferred, 1% of the balance | $400 a month |
A $40,000 student loan with $0 showing on the credit report, counted under each program’s rule as of November 2026. Hypothetical, not a quote.
See the numbers
| Counted each month | |
|---|---|
| Fannie Mae, documented $0 income-driven payment | $0 |
| VA, deferred 12+ months past closing, with proof | $0 |
| VA, 5% of the balance divided by 12 | $167 |
| FHA, USDA or Freddie Mac, 0.5% of the balance | $200 |
| Fannie Mae, deferred, 1% of the balance | $400 |
Now put that into a real ratio. Take a buyer earning $6,000 a month before taxes, with a $2,000 house payment and a $400 car payment:
What the counted payment does to the ratio (hypothetical)
| Gross monthly income | $6,000 | |
| House payment (principal, interest, taxes, insurance) | $2,000 | |
| + | Car payment | $400 |
| + | Student loan, counted at $0 | $0 |
| = | Total monthly debts | $2,400 |
That’s 40% of income. Counted at $200, the total is $2,600, about 43%. Counted at $400, it’s $2,800, about 47%.
Round numbers for illustration only.
Nearly seven points of debt-to-income from one rule. On a tight file, that’s the difference between a yes and a smaller house.
How picking the right program changes the counted payment
Because each program counts your loans differently, the program is a lever. If your loans are deferred, FHA’s 0.5% often beats Fannie Mae’s 1%. If you’re on an income-driven plan at $0, a Fannie Mae conventional loan can beat FHA. If you’re a veteran with a deferment that runs at least 12 months past closing, a VA loan doesn’t count them at all. Program choice touches more than student loans, so the full trade-off is on FHA vs conventional. I run your file under each program’s rule and use the one that counts your loans the lightest, as long as the rest of your file fits that program.
Paying a loan off is a lever too, but usually a weak one. A student loan counted at a percentage of its balance frees very little room per dollar compared with a car loan:
Paying off $9,000: which debt frees the most room? (hypothetical)
| Car loan, $9,000 left at $450 a month | frees $450 a month | |
| Student loan counted at 1% of the balance | frees $90 a month | |
| Student loan counted at 0.5% of the balance | frees $45 a month |
At an example rate of 6.5%, $450 a month supports roughly $60,000 of home price. $45 a month supports roughly $6,000.
Tyler’s take
Before you send extra money to a student loan to “qualify,” look at what each payoff frees per dollar. The car note with a big payment on a small balance is almost always the better target, and the student loan can stay right where it is.
What to gather before you apply
Most student loan problems in underwriting are paperwork problems. Get these together early:
Student loan paperwork to gather
- Your latest statement from each servicer, showing the balance, the required monthly payment and the status: in repayment, deferred, in forbearance or on an income-driven plan.
- If you’re on an income-driven plan, the letter or statement showing your current payment, even when it’s $0.
- If your loans are deferred, the letter showing when the deferment ends. On VA, that date decides whether the loan counts.
- If a loan was forgiven, canceled or discharged, the written notice.
- A look at your credit report. If it shows a payment that’s wrong, Fannie Mae can use your latest statement, and FHA can use a documented payment above $0 with written proof from the servicer.
Send me your servicer statements and I’ll run your file under each program side by side, so you can see what your student loans actually cost you in buying power. You can also test your own numbers in the affordability calculator. Then we pick the program that counts them the lightest and still fits everything else in your file.
Questions people ask me about this
Should I pay off my student loans before buying a house?
Usually not first. A student loan counted at 0.5% or 1% of the balance frees very little room per dollar you pay off, while a car loan or card frees much more. Keep your cash for closing and reserves, and pay off a debt only when it changes the outcome. I run the numbers both ways before you spend a dollar.
Do student loans affect my mortgage interest rate?
Not directly. In my experience your rate follows your credit score and the loan, not your income or your student loans. One indirect cost: on a conventional loan with mortgage insurance, published 2026 mortgage insurance rate cards add a surcharge when your debt-to-income ratio is over 45%, so a big counted payment can raise your PMI.
Do student loans in a forgiveness program still count in my debt-to-income ratio?
Plan on them counting until the forgiveness actually happens. FHA leaves a student loan out only with written proof that it has been forgiven, canceled, discharged or paid in full. USDA keeps the payment in your debts until the creditor releases you.
Do student loans hurt my credit score for a mortgage?
Only through how you’ve paid them. In my files, old student loan late payments are one of the most common reasons a score won’t climb as fast as a borrower hopes, even after the cards are paid down. How scores work for a mortgage is on the credit score page.
Sources
- Fannie Mae Selling Guide B3-6-05, monthly debt obligations (student loans)
- Freddie Mac, Loan Product Advisor feedback message updates for student loans (2025)
- HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Update 18), student loans
- VA Loan Guaranty Conference 2023, credit underwriting (student loans)
- USDA Handbook HB-1-3555, Chapter 11, ratio analysis
- 31 U.S.C. 3720B, barring delinquent federal debtors from federal loans
Examples on this page are hypothetical illustrations, rounded for teaching. They are not a quote or an offer to lend. Rates may change or may not be available at the time of loan commitment or lock-in. For example terms with the annual percentage rate (APR), see example terms and APR.