Friday, April 27, 2012

Will Your Student Loans Prevent You From Getting a Mortgage?

The N.Y. Times investigates:

Outstanding student loand debt now totals over $1 trillion, according to a report last month from the Consumer Financial Protection Bureau. That surpasses the amount owned on all credit cards in the United States. [...]

Most lenders follow underwriting guidelines that limit total debt payments — for the mortgage and property taxes, plus credit cards, student loans, car loans and other debts — to 45 to 50 percent of a borrower’s adjusted gross income.  Assuming the mortgage and taxes will eat up 33 to 35 percent, that means student loan payments, plus credit card bills, can account for no more than 10 percent or so of gross income, Ms. Sweet-Kostoplis said. That equals $833 a month for someone who makes $100,000 a year.

Steve Clowney

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