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Is Student Loan Debt Stopping You from Buying a House?

Hello Hampton Roads,

Is student loan debt stopping you from buying a house?
According to the NAR (National Association of Realtors), almost 20% of buyers with student loan debt are denied a mortgage because these loans cause the borrowers' DTI (debt to income ratio) to increase.  Even if loans are in deferment/forebearance, lenders are still required to count the debt and use 1% of the loan balance as the monthly repayment amount.

The lower the DTI ratio, the more money can go towards housing and the higher a mortgage amount a buyer can qualify for.  In calculating your DTI, lenders look at both your front end ratio and your back end ratio.

Front End Ratio
This takes into account the amount of your projected monthly housing payment and your gross monthly income.  For example if your gross monthly income is $4500.00/mo and your housing payment,  PITI (principle, interest, taxes and insurance) is $1300.  Then your front end DTI would be 28.8%.   $1300/$4500 =28.8%.

Back End Ratio

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