How do lenders treat student loans in DTI, especially if I'm on IDR?

How do lenders count student loans in my DTI?

You want to know how lenders calculate your debt-to-income ratio when you have student loans, particularly if you're on an income-driven repayment plan. Lenders use different methods to count student loans in your DTI calculation, and the approach depends on your payment status and loan type.

Lenders typically use one of three methods for student loan DTI calculations. If you're making payments, they use your actual monthly payment amount. For loans in deferment or forbearance, many lenders calculate 0.5% to 1% of the total loan balance as your monthly payment. For income-driven repayment plans, lenders commonly use your actual IDR payment amount if it's documented on your credit report or loan servicer statement.

Check your credit report to see what monthly payment amount appears for your student loans. Get a recent statement from your loan servicer that shows your current IDR payment. If your IDR payment is $0, some lenders will use that amount while others may still calculate a payment based on the loan balance.

Share your loan servicer statement and IDR documentation with your lender early in the process. They can walk you through exactly how your student loans will count in your DTI calculation and help you understand what payment amount they'll use for qualification purposes.