How to Get an FHA Mortgage Even With Student Loan Debt

Student loans are, unfortunately, very expensive and can take years to pay off. If you’re thinking about applying for a Federal Housing Administration (FHA) loan, then student loans will not make it easy. 

Seven in ten college seniors that have graduated from public and nonprofit colleges have student-loan debt. They equal up to a whopping $30,100 for each senior. Balancing student loans and FHA loans can be a struggle, which is why so few students take it.

In doing so, these students are missing out on FHA loan benefits, most significantly that they require only a 3.5 percent down payment, even if your FICO credit score is as low as 580.

If you are still thinking about getting an FHA loan, there are several things you need to keep in mind. Here are some of the things to consider when applying for an FHA loan on top of your student loans.

Keep Your Debt-to-Income Ratio in Mind

When applying for any loan, make sure you always keep your debt-to-income ratio in mind. You don’t want to drown yourself in debt when you have no way of paying it off in the near future. This might only lead to further accumulation of debt.

For most mortgage lenders, this is also something that they take into account. They will also ask for an estimation of any of your new mortgage payments, which have to be less than or equal to about 43 percent of your gross monthly income (before taxes are taken out).

Going above the 43 percent mark might disqualify your mortgage application. However, you do have the option to apply for a smaller mortgage and get a less expensive home.

Learn the One-Percent Rule

Do note that recent rule changes have now modified the way the One-Percent Rule works. Lenders use this rule to determine the average monthly student-loan payments of their borrowers. 

They calculated this by using a figure equal to one percent of the borrower’s outstanding student-loan debt. However, this proved to be a problem, especially as the one percent figure could amount to more than what the borrowers were paying every month.

As a result, changes have been made by the Federal National Mortgage Association, or more commonly known as Fannie Mae. Lenders now have to use the monthly student-loan payments reported to three national credit bureaus. 

  • The Impact of the One-Percent Rule

How exactly does the newly modified One-Percent Rule affect borrowers of student loans? Well, thanks to these changes, it is now easier for you to qualify for a mortgage if your actual payment is lower than the one percent figure, which significantly lowers your debt-to-income ratio as well.

  • What You Can Do

If you believe that your student loan debt is too high, you can still qualify for an FHA loan. You have the option to reduce your other debts and try to make something work, or you can try to wait until your student loans even out with your payments.


Although qualifying for an FHA loan is a complicated process, it is still possible even with the burden of student loans. Learn the different ways you can reduce your debt to ease the burden and get the house you want.

Learn your loan options with the help of Hawkins Home Loans. We are one of the best mortgage lenders in the Sacramento area that can help provide resources for a stress-free lending process. Get in touch with us today to know more.