Roughly 43 million Americans carry student debt — $1.4 trillion nationwide — according to industry estimates, effectively locking out millions of potential homebuyers from the housing market. Better mortgage options may now be available. The new Fannie Mae programs address specific roadblocks that borrowers with student loans face, providing a jump-start to a whole generation of homebuyers.
Fannie Mae’s new solutions include:
- Student loan cash-out refinance: Offers homeowners, with at least 20 percent equity in their homes, the flexibility to pay off student debt while potentially refinancing to a lower mortgage interest rate.
- Debt paid by others: Widens borrower eligibility to qualify for a home loan by excluding non-mortgage debt, such as credit cards, auto loans, and student loans, paid by someone else from the borrower’s debt-to-income ratio (DTI).
- Student debt payment calculation: Makes it more likely for borrowers with student debt to qualify for a loan by allowing lenders to accept student loan payment information on credit reports.