I pay $121 per month on my IBR student loan repayment. Will $121 count towards the DTI or 1% of my student loans balance for an USDA loan?

We are preparing to qualify for an USDA loan in January 2016. We sold our previous home via short sale in December 2012 due to my other half being fired and unemployed from March 2012 until September 2013. The short sale was reported on our credit reports as "Settled - less than full balance".

Her FICO scores are 670 TransUnion, 670 Equifax, and 697 Experian. His FICO scores are 654 TransUnion, 661 Equifax and 689 Experian.

Salaries: Her: $48,000 His: $36,000 base + overtime
USDA Annual Household Income: $99,378
Adjusted Annual Income: $89,818

We are currently renting a house for $1450 per month. We have a perfect rental history and have not had any late payments on any bills for the past years.

I am trying to determine how my IBR student loan repayment will factor into the DTI amount. I pay $121 per month on my student loan. Will $121 count towards the DTI or 1% of my student loans balance?
(0) | asked by: Anonymous | share | 20 months ago | Report
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answer by Bill L    |   Contact Me
Hi. Please check with your local realtor so that they can help you make sense of the situation. If need be, they should suggest a viable course of action that you should follow. Please note the content is not intended to be, legal or investment advice. You should consult a licensed attorney or realtor for advice regarding your individual situation."
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19 months ago  |   Report   |   share
answer by Team Move OVM    |   Visit My Website   |   Contact Me
The USDA guideline is that lenders must include the greater of 1% of the outstanding loan balance or the verified fixed payment (not payments in the income based repayment plan). We would request that you provide how much your normal payment would be from your student loan company(ies). There are exceptions to use other amounts but for IBR, one of the above must be used. Keep in mind that since you are in the Raleigh area, that you are very familiar with the areas that qualify for USDA as a lot of the RDU area does not qualify. It sounds like you have the understanding of the income requirements but make sure that an experienced USDA lender figures this for you. Max income for Wake County for a family of 4 is $91,850 but there are ways to lower your "compliance" income by $480 per child and by documented childcare expenses for instance. USDA will count overtime, bonuses, etc in this calculation so be careful since you are near or above this limit. For best rate and chance of approval, make sure that you pay down any balances on credit cards as balance compared to credit limits as a percentage is 30% of your credit scores. If you have other questions, please ask! I hope this helps.
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answer by Rhonda Fussell    |   Contact Me
Yes it will count debt to ratio, I think you need to get scores up to 680 for usda, Call your lender and get them to tell you what you need to do in order to get a usda loan. If they don't help let me know I have a lot of lenders that I work with that can help you. Also remember all lenders are different. I have flipped a loan 5 times in order to find a lender that can close the loan.
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answer by Brian Cox    |   Visit My Website   |   Contact Me
I would definitely suggest contacting a local realtor, so they can review your credit file, and give you great advice.
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answer by Betty Bargoil    |   Contact Me
With the recent changes USDA uses the 1% of the balance rule for the monthly payment and yes it will count in the customers debt ratio.
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answer by Jay Music Realtor    |   Contact Me
Call my lender 919 520 2005 and he will give you an accurate answer and has done many USDA loans. his name is Doug Anderson
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