Conventional
Actual payment OR 0.5% of balance
Fannie/Freddie use the LOWER of: your actual monthly payment (if greater than $0), OR 0.5% of the outstanding balance. $50K balance with $0 IDR payment = $250/mo for DTI math.
Student Loans + Mortgage · DTI math
Student debt isn't
the wall you think it is.
Lenders use one of three calculations on your student loans — actual payment, 0.5-1% of balance, or income-driven plan amount. Knowing which calculation your loan type uses can swing $50K of qualifying buying power.
· The three calculations
Same loans.
Different DTI math.
FHA
Actual OR 0.5% of balance
Similar to conventional. FHA uses the actual payment if it's > $0, otherwise 0.5% of balance. Some interpretations use 1% — confirm with your LO.
VA
Actual OR 5% ÷ 12
VA uses 5% of balance ÷ 12 months as the assumed monthly payment, OR your actual payment (whichever is lower). Most veteran-friendly calculation in the industry.
USDA
Actual OR 0.5%
USDA matches conventional treatment. Same 0.5% fallback if no payment is reported.
IDR plans
Income-Driven Repayment counts
If you're on IBR/PAYE/SAVE/REPAYE and your payment is $50/mo, lenders use $50/mo (subject to the floor rules above). Get on an IDR plan BEFORE applying — it can transform your DTI.
· Watch-outs
Four moves
to make before applying.
Pitfall 01
Confirm your servicer reports your IDR payment.
If your payment is $0 on IDR but the servicer reports a 'standard' payment to the credit bureaus, lenders may use the higher number. Pull your credit reports + verify what's reported.
Pitfall 02
Don't switch to deferment right before applying.
Deferment can trigger the higher 0.5% / 1% calculation depending on lender. Stay current on IDR if your payment is low.
Pitfall 03
Don't pay down student loans to qualify.
Counterintuitively — paying down balance reduces the 0.5% calculation, but doesn't help if your IDR payment is already counted. Check both numbers before draining savings.
Pitfall 04
Don't hide PSLF / forgiveness pursuits.
Some lenders worry about loan terms changing if forgiveness happens. Document your plan + status. Honesty + paperwork beats surprise mid-process.
Student loans don't block buying.
They just shape the math.
Five minutes. We map your student loan profile against each loan type and find the calculation that gives you the most buying power.