Posted To: MND NewsWire

The Urban Institute (UI) says the five government mortgage lenders and their various ways of accounting for income-driven repayment (IDR) plans are inhibiting the ability of many potential homebuyers to buy a home. IDR plans are used by many student loan programs and require special handling in mortgage underwriting. The problem with an IDR arises in the calculation of the debt-to-income (DTI) ratio, the percentage of a borrower’s income that is committed to debt service including payment on student loans. While there has recently been a little easing of what had been fairly rigid caps on DTI, higher ratios still limit a borrower’s ability to get a mortgage or increase the cost of the loan. The three government agencies that guarantee mortgages, (FHA, the VA, USDA’s Rural Home Loan program…(read more)

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Source: Mortgage News Daily