Are Deferred Student Loans Counted In DTI? | Lender Rules

Most mortgage lenders include deferred student loan payments in debt-to-income ratios using an estimated monthly amount.

Deferred student debt can feel invisible while payments are paused, yet lenders rarely treat it that way. When you apply for a mortgage or any large loan, underwriters still plug those student balances into your debt-to-income ratio (DTI) using either a documented payment or a calculated stand-in payment.

What Debt-To-Income Ratio Actually Measures

DTI compares your regular monthly debt payments with your gross monthly income. The Consumer Financial Protection Bureau explains it as the sum of your monthly debt obligations divided by your income before taxes, expressed as a percentage. Consumer Financial Protection Bureau guidance describes it as a quick way for lenders to judge how stretched your budget already is.

A lower DTI signals more breathing room for new payments. A higher DTI tells a lender that another loan could strain your budget. Many mortgage programs set a maximum back-end DTI somewhere in the 40s, though exact limits vary by loan type and by individual lender.

When people talk about student loans and DTI, they almost always mean the back-end ratio. This includes housing costs plus all recurring debt payments, such as car loans, credit cards, personal loans, and student debt. The front-end ratio, by contrast, looks only at housing costs relative to income.

Are Deferred Student Loans Counted In DTI? Mortgage Basics

For mainstream mortgage programs, the short answer is yes. Deferred student loans are almost always counted in the back-end DTI, just not always in the same way. Lenders either use a documented payment from your loan servicer or a calculated payment based on your remaining balance.

Regulators and agencies want lenders to avoid surprises once payments restart. Fannie Mae’s selling guide states that deferred installment debts must be part of recurring monthly debt obligations for underwriting purposes. Fannie Mae monthly debt rules spell out that this includes student loans in deferment.

How Different Mortgage Types Treat Deferred Loans

The exact formula depends on the program and on what appears on your credit report or loan paperwork. In broad terms, lenders follow these patterns:

• Conventional loans (Fannie Mae, Freddie Mac): Underwriters use the payment shown on your credit report if it reflects a fully amortizing amount. If no payment appears, they use either one percent or one half percent of the balance, or they calculate a payment from the documented terms, depending on current agency rules.
• FHA loans: Updated U.S. Department of Housing and Urban Development guidance allows lenders to use the actual documented payment or, when the report shows zero, one half percent of the remaining balance as a stand-in payment. HUD student loan policy notice explains this change in more detail.
• VA and USDA loans: These programs also expect lenders to count deferred student loans, often with a payment of one half percent of the balance or a fully amortizing amount if documentation shows a higher figure.

A paused payment does not erase the debt. Lenders look ahead to the period when your student loan bill returns and ask whether your income can carry both the new mortgage and the renewed student payment. If your DTI barely passes today with a hypothetical payment, they know the margin will shrink once a real payment lands on your statement.

This risk management angle matters now that student loan balances have grown and more borrowers use deferment at some point. Lenders want to avoid putting borrowers into loans that work only while payments sit at zero.

How Major Loan Programs Count Deferred Student Loans

The table below summarizes common approaches that large mortgage programs use when they handle deferred student loans. Exact rules vary by lender and change over time, yet the patterns stay fairly consistent.

Loan Program	Assumed Payment For Deferred Loans	Typical Back-End DTI Range
Conventional (Fannie Mae)	Uses documented payment when shown; if not, lenders often apply one percent of balance or a fully amortizing amount from loan terms.	Often capped around low to mid 40s.
Conventional (Freddie Mac)	Uses documented payment or, when missing, one half percent of remaining balance as the assumed payment.	Comparable to Fannie Mae ranges.
FHA	Uses actual payment if fully amortizing; if the report shows zero, one half percent of remaining balance is counted. FHA handbook update explains this formula.	Can reach around 50 percent when other strengths offset risk.
VA	Treats deferred loans case by case, with many underwriters using a small percentage of balance when no payment appears.	Guideline ratios near low 40s, with room for exceptions.
USDA	Uses documented payment or a modest percentage of balance while loans sit in deferment.	Back-end DTI often capped in low to mid 40s.
Jumbo	Bank or investor chooses a formula, often tougher than agency methods.	Ranges vary and depend heavily on income and reserves.
Auto And Personal Loans	Reported payment normally flows straight into the DTI calculation.	Still counted when lenders test mortgage eligibility.

Step-By-Step: Estimating Your DTI With Deferred Student Loans

Before you sit down with a loan officer, it helps to run your own numbers. That way, you can see how much room you have for a new mortgage payment and how your deferred loans change the picture.

1. List Your Monthly Debt Payments

Start with all recurring monthly debts: car payments, minimum credit card payments, personal loans, court-ordered payments for children or alimony, and any other long-term obligation. If a debt has fewer than ten payments left, many lenders remove it from the DTI calculation, but long schedules usually stay in the math.

2. Add An Assumed Student Loan Payment

Next, add an estimated payment for each deferred student loan. If your credit report or your servicer letter shows a later fully amortizing payment, use that figure. If the report lists zero and you do not have a clear later payment yet, you can approximate with one half percent of the balance, which lines up with many agency guidelines for loans in deferment. This mirrors formulas that FHA and similar programs publish for insured loans.

3. Compute The Ratio

Add together your housing payment estimate and all your monthly debts, including the assumed student loan amounts. Then divide that total by your gross monthly income. Multiply by one hundred to convert the result into a percentage. The CFPB explains this same formula in its public guidance on DTI, showing how lenders use it to gauge repayment capacity. Official DTI explanation lays out that formula in plain language.

4. Compare With Common DTI Limits

Many lenders like to see a back-end DTI under the mid 40s, though some programs accept higher levels when other strengths offset risk. If your ratio sits near the upper edge before a property tax hike, a homeowners association fee, or renewed student loan payments, your application may face extra review.

Example DTI Scenarios With Deferred Student Loans

To see how different choices change the picture, run through a few simplified examples. The numbers below are rounded for clarity and assume a single borrower with no co-signer.

Scenario	Assumed Student Loan Payment	Resulting Back-End DTI
$50,000 balance, loans deferred, lender uses one half percent of balance.	$250 added to monthly debts.	DTI rises from 36 percent to about 43 percent.
Same borrower moves to an income-driven plan with a $90 documented payment.	$90 instead of $250 in the DTI math.	DTI drops near 38 percent, leaving more room for housing.
$100,000 balance, no payment shown, lender uses one percent of balance.	$1,000 assumed monthly payment.	Back-end DTI jumps above common limits, which can block approval.
Borrower pays down credit card debt so that minimums fall by $200.	Student loan assumption stays the same.	Back-end DTI moves several points lower due to reduced revolving debt.
Borrower adds a co-borrower with stable income and modest debt.	Student loan assumption still tied to original borrower.	Combined income lowers the shared DTI percentage.

Ways To Keep DTI Manageable With Deferred Loans

Once you know how your lender handles deferred student loans, you can shape your finances so that the assumed student payment fits within program limits.

Check How Your Loans Are Reported

Pull a recent credit report and compare the student loan entries with your servicer statements. Look at balances, statuses, and any reported monthly payment amounts. If the report shows a higher payment than your actual fully amortizing amount, ask your servicer for updated documentation that your lender can rely on.

Trim Other Debts

Lowering non-student debt gives you more room for a solid mortgage payment even when deferred loans count in your DTI. Paying down credit cards, refinancing a car loan to a lower payment, or clearing small personal loans can all move the ratio in your favor.

Practical Takeaways On Deferred Student Loans And DTI

Deferred student loans usually count in your debt-to-income ratio, even when you owe nothing this month. Rules from agencies such as the CFPB, HUD, and Fannie Mae all steer lenders toward including a realistic payment in back-end DTI calculations. CFPB answers on deferment and Fannie Mae debt guidance both show how deferred obligations remain part of your financial picture.

Take time to learn how your loans show up on your credit report, what payment your lender will assume, and how that number affects your target price range. With that knowledge, you can decide whether to adjust other debts, switch to a different repayment plan, or wait a little longer before applying for a mortgage.