“I have student loans, so I probably can't qualify for a mortgage.”

I hear variations of that concern from prospective homebuyers regularly.

Student-loan debt can affect mortgage qualification, but having student loans does not automatically prevent you from buying a home.

What matters is how the mortgage program calculates the monthly student-loan obligation when determining your debt-to-income ratio, or DTI.

And in 2026, there is a particularly important difference between FHA and conventional Fannie Mae financing that buyers should understand.

Why the Monthly Payment Matters More Than the Balance

Suppose two borrowers each owe $60,000 in student loans.

Borrower A has a documented monthly payment of $250.

Borrower B's credit report shows a $0 monthly payment.

It might seem that Borrower B would automatically have an easier time qualifying.

Not necessarily.

Mortgage programs have specific rules for determining what payment must be included in the borrower's monthly obligations.

That qualifying payment then affects the borrower's DTI.

How FHA Treats Student Loans

The Federal Housing Administration maintains its requirements in HUD Handbook 4000.1. HUD posted its latest Handbook update on August 12, 2026.

For outstanding student loans, FHA's published guidance requires the lender to use:

The payment shown on the credit report or the actual documented payment when that payment is greater than zero; or

0.5% of the outstanding student-loan balance when the credit report reports a $0 monthly payment.

Let's see what that can mean.

If your student-loan balance is:

$60,000

and the applicable FHA calculation requires 0.5%:

$60,000 × 0.005 = $300 per month

That $300 can be included in the monthly obligations used to calculate your mortgage qualification.

HUD also permits the lender to exclude the student-loan payment when appropriate written documentation demonstrates that the balance has been forgiven, canceled, discharged, or otherwise paid in full.

HUD FHA Single Family Housing Policy Handbook

Conventional Financing Can Treat a $0 Payment Differently

This is where the comparison becomes particularly important.

Under current Fannie Mae guidelines, when the credit report provides a monthly student-loan payment, the lender generally may use that payment for qualification.

If the credit report doesn't reflect the correct payment, the lender may use the payment documented on the borrower's most recent student-loan statement.

But here's the important part:

If the borrower is on an income-driven repayment plan and appropriate student-loan documentation verifies that the actual monthly payment is $0, Fannie Mae permits the lender to qualify the borrower using a $0 student-loan payment.

For a borrower carrying a substantial student-loan balance, that difference can materially affect mortgage qualification.

Fannie Mae's current guidance was published with the Selling Guide updated through September 2, 2026, so this is not an outdated pandemic-era rule.

Fannie Mae's current student-loan guidelines

What About Deferred Student Loans?

A deferment doesn't necessarily mean the mortgage lender ignores the debt.

For Fannie Mae financing, if the student loan is deferred or in forbearance and there is no qualifying monthly payment available, the lender may use either:

1% of the outstanding student-loan balance, or

a fully amortizing payment calculated from the documented repayment terms.

That's another reason buyers shouldn't simply look at their credit report and assume a blank or $0 payment means the debt won't affect qualification.

How Student Loans Affect Your Debt-to-Income Ratio

Your DTI compares qualifying monthly obligations with qualifying monthly income.

For example, assume a borrower earns:

$7,000 per month

and has total monthly obligations of:

$3,150

The simplified DTI would be:

$3,150 ÷ $7,000 = 45%

Now add a $300 student-loan obligation:

$3,450 ÷ $7,000 = 49.3%

That one calculation could substantially change the available purchase price or even which mortgage program works best.

This is why I don't like telling buyers that FHA, conventional, or any other program is automatically “best” before examining their complete file.

FHA Isn't Always Better—and Conventional Isn't Always Better

FHA can be an excellent option for many first-time buyers, particularly depending on credit, down payment, overall qualification, and other factors.

Conventional financing may provide advantages for another borrower.

A buyer with a documented $0 income-driven student-loan payment, for example, may receive a very different DTI result under applicable Fannie Mae rules than under FHA's student-loan calculation.

On the other hand, the borrower's credit profile, available down payment, automated-underwriting findings, mortgage insurance, and other factors might still make FHA the stronger overall solution.

We need to compare the entire loan—not one guideline.

Mortgage Rates Moved Higher This Week

There's also fresh rate information for buyers planning their financing.

Yesterday, September 10, 2026, Freddie Mac reported that the national average 30-year fixed mortgage increased to 6.76%, from 6.71% the previous week.

The average 15-year fixed mortgage was 6.09%, up from 6.04%.

Freddie Mac's current mortgage-rate information

Those are national survey averages—not a Premiere Capital Mortgage rate quote and not specifically FHA pricing. Your actual mortgage rate can vary based on program, credit, loan-to-value, property, points, lender credits, and other characteristics.

Don't Pay Off Student Loans Just to Qualify Until We Run the Numbers

This may be the most important takeaway.

If you're preparing to purchase a home, don't automatically drain your savings to pay down a student loan because you think that's what the mortgage lender needs.

First, let us calculate how the debt will actually be treated under the available programs.

Your cash may be more valuable for your down payment, closing costs, reserves, moving expenses, or emergency fund.

Sometimes paying down debt is exactly the right strategy.

Other times, it accomplishes very little for mortgage qualification.

Let’s Calculate It Before You Rule Yourself Out

If you're considering purchasing in Murrieta, Temecula, Riverside County, or elsewhere in California and student loans are making you wonder whether you can qualify, let's run the actual numbers.

At Premiere Capital Mortgage, we can compare FHA, conventional, down-payment-assistance, and other appropriate financing options based on your complete situation.

Your student-loan balance may look intimidating.

But the number that matters for mortgage qualification may be very different from what you expect.

John F. Lawrence
Premiere Capital Mortgage
Murrieta, California
951-634-9284
PCMloans.net

For educational purposes only. This is not a commitment to lend, an interest-rate quote, credit advice, or a guarantee of financing. Student-loan treatment, underwriting requirements, rates, fees, and mortgage-program guidelines are subject to change. Qualification depends on the individual borrower, property, lender, automated-underwriting findings, and applicable program requirements.