Student Loans and Qualifying for a Mortgage in Washington State (2026 Guide)

Student loan debt is one of the most common obstacles home buyers face when trying to qualify for a mortgage — but it doesn’t have to prevent you from buying (or refinancing) a home. Understanding how lenders calculate student loan payments, and how the rules differ by loan program, can help you plan strategically and avoid surprises during the approval process.

This guide covers current guidelines for conventional, FHA, VA, and USDA loans, along with practical strategies for borrowers with student loan debt.

Why Student Loans Affect Your Mortgage Qualifying

When a lender calculates your debt-to-income ratio (DTI), they include a monthly payment for every debt on your credit report — including student loans, even if they are currently deferred or in an income-based repayment plan.

The challenge is that different loan programs calculate that student loan payment differently. A deferred loan with a $0 current payment may still count as a significant monthly obligation depending on which program you’re using — which directly affects how much home you qualify for.

A Note on the 2026 Repayment Plan Changes

Starting July 1, 2026, the federal repayment plan landscape is changing significantly — the SAVE plan is ending, a couple of older income-driven plans are being phased out, and two new plans (the Repayment Assistance Plan and the Tiered Standard Plan) are taking their place. (A pending lawsuit is seeking to delay SAVE’s shutdown specifically; as of this writing similar attempts haven’t succeeded, but it’s worth confirming the current status before assuming the timeline below is final.) If you’re currently on one of the plans being phased out, or your loan is showing a $0 payment due to forbearance, your actual reported payment is likely to change in the months ahead — which means the number a lender plugs into your DTI calculation could change too, independent of anything else in your file.

The loan-program rules below (how Fannie Mae, Freddie Mac, FHA, VA, and USDA each calculate your student loan payment) aren’t changing. What’s changing is which number ends up on your credit report in the first place. If you’re planning to buy or refinance in the next year, it’s worth running your numbers under your likely new plan before assuming your qualifying picture stays the same.

Current Student Loan Guidelines by Loan Program

Conventional — Fannie Mae

Fannie Mae requires lenders to use the actual documented monthly payment reported on the credit report, regardless of whether the loan is deferred or in an income-based repayment plan. If the credit report shows $0 and you’re actively on a documented income-driven repayment plan, the lender can verify that $0 with your servicer and qualify you using that $0 payment — no fallback calculation required. The 1% of balance fallback applies specifically to loans that are deferred or in forbearance, not to an active income-driven plan with a genuinely documented $0.

This is an important distinction — if you’re on an income-driven repayment plan with a very low (or $0) payment, Fannie Mae will generally use that actual payment, which can be significantly lower than 1% of the balance. This can be a meaningful advantage for borrowers with large student loan balances on income-based plans.

Conventional — Freddie Mac

Freddie Mac follows similar guidelines. The lender uses the actual monthly payment as reported on the credit report. If no payment is reported or the payment is $0, Freddie Mac requires 0.5% of the outstanding balance to be used as the monthly payment — which is lower than Fannie Mae’s 1% fallback and can provide more qualifying flexibility in some scenarios.

FHA

FHA uses your actual documented monthly payment whenever one is available — including a documented $0 payment under an income-driven repayment plan. Lenders only fall back to 0.5% of the outstanding balance when no payment is documented, or when the loan is in deferment or forbearance. This is more flexible than older FHA rules used to be; HUD updated this policy in 2021 specifically to better account for income-driven repayment plans.

VA

VA loans have more flexible student loan guidelines than other programs. Student loan payments are only included in the DTI calculation if payments are currently due or will become due within 12 months of closing. If the borrower can document that payments will not be required for more than 12 months after closing — such as an active deferment — the payment may be excluded entirely. For loans that are due within that 12-month window, lenders use your actual documented payment (including a verified $0 under an income-driven plan); if no clean documented payment exists, lenders use the greater of the credit report payment or 5% of the balance divided by 12 months.

This makes VA loans one of the most favorable programs for borrowers with deferred student loans, and is one of the reasons VA financing can be a strong option for recent graduates who are still within their deferment period.

USDA

USDA uses the actual documented payment on the credit report when one is available — including a documented payment under an income-driven repayment plan. If no payment is documented, or the loan is deferred or in forbearance, the lender uses 0.5% of the outstanding balance rather than the full 1% USDA guidelines used to require.

Quick Reference: Student Loan Payment Calculation by Program

Loan Program	If Payment > $0 Reported	If $0 / No Payment Reported
Fannie Mae	Actual payment	$0 if verified on an active income-driven plan; otherwise 1% of balance (deferred/forbearance)
Freddie Mac	Actual payment	0.5% of balance
FHA	Actual payment (incl. documented $0 under IDR)	0.5% of balance (no payment documented, deferred, or forbearance)
VA	Actual payment (if due within 12 months); greater of credit report payment or 5% of balance ÷ 12 if undocumented	May be excluded if deferred 12+ months
USDA	Actual payment (incl. documented IDR payment)	0.5% of balance

Note: Mortgage guidelines change. Always confirm current requirements with your loan officer.

Why the Calculation Method Matters

These differences may seem minor but they can have a significant impact on your qualifying power. Here’s a simple example:

If you have $60,000 in student loan debt:

• At 1% of balance: $600/month factored into your DTI
• At 0.5% of balance: $300/month factored into your DTI
• On an income-based repayment plan with a $150 actual payment: $150/month factored in (under Fannie Mae guidelines)

The difference between $600 and $150 per month in your DTI calculation could mean tens of thousands of dollars in qualifying power — potentially the difference between qualifying for the home you want or not.

Practical Strategies for Buyers with Student Loans

Get on the right repayment plan before applying

If you have federal student loans, which repayment plan you’re on can meaningfully change the payment used in your DTI calculation — particularly under Fannie Mae guidelines, which use your actual documented payment. That said, the new Repayment Assistance Plan (RAP) doesn’t work the same way older income-driven plans did: it’s based on a straight percentage of your adjusted gross income rather than excluding a discretionary-income threshold, so it doesn’t automatically produce the lowest possible payment the way some older plans sometimes did. Talk to your loan servicer about which plan actually gives you the lowest documented payment for your situation, then talk to your loan officer about how that number plays into your qualifying — before you apply, not after.

Choose the right loan program for your scenario

As shown above, different programs treat student loans very differently. A borrower with large deferred student loans may qualify for significantly more under VA or Freddie Mac than under USDA. Running your scenario across multiple programs before committing to one can make a meaningful difference.

Don’t take on new student loan debt during the mortgage process

Any new debt that appears on your credit report during the loan process will be factored into your DTI. If you’re in school or considering returning, talk to your loan officer before making any changes to your student loan status.

Document your payment plan carefully

If you’re on an income-based repayment plan and want to use the actual payment rather than the percentage-of-balance calculation, your loan officer will need documentation from your loan servicer confirming the payment amount and plan type. Having this ready early can speed up the process.

Start the conversation early

Student loan strategy is one area where working with an experienced loan officer before you start house hunting can make a real difference. A few months of planning — whether that means adjusting your repayment plan, paying down a specific loan, or choosing the right program — can meaningfully improve your qualifying position.

Consider whether it makes more sense to pay the loan off entirely

If you have enough home equity, there’s a Fannie Mae feature that lets you pay off a student loan in full through a refinance without the standard cash-out refinance fee — which can make eliminating the loan more affordable than it looks at first glance. It’s not the right move for everyone, but it’s worth running the numbers on, especially with repayment plans in flux. 👉 Read: Refinance to Pay Off Student Loans Without Cash-Out Pricing

Student Loans and Co-Signers

If a parent co-signed a student loan for you, that loan will appear on both your credit report and theirs. For mortgage qualifying purposes, the loan will be factored into both borrowers’ DTI calculations unless it can be documented that someone else is making the payments.

Conversely, if you co-signed a student loan for someone else — a child or a sibling, for example — that loan will be factored into your DTI when you apply for a mortgage, even if you are not making the payments. There are limited exceptions where the payment can be excluded if you can document 12 months of someone else making the payments directly.

Have student loans and wondering how they affect your mortgage options?

I’ve been helping Washington State buyers navigate complex qualifying scenarios for over 25 years. Let’s look at your specific student loan situation and find the loan program and strategy that gives you the best shot at qualifying for the home you want.

Let’s Talk  |  Get a Rate Quote

Rhonda Porter · Licensed Mortgage Advisor · NMLS #121324 · Washington State Last updated: June 2026