Can I get a VA loan with student loans?
By Kyle Melvin · NMLS #1486450 · REV Mortgage ·
Short answer
Yes. Student loans are ordinary debts in a VA file, and the question is only what monthly payment the lender counts. If the loan is deferred more than twelve months past closing, VA lets the lender exclude it; if it is in repayment or the deferment ends sooner, the lender counts the actual payment shown on the credit report or statement — or, if that payment is zero or not documented, a percentage of the balance. VA's treatment is more forgiving than FHA's on deferred loans and roughly in line with conventional on income-driven plans.
VA's rule, in Chapter 4 of the VA Lenders Handbook, is straightforward compared with other programs:
- Deferred more than twelve months beyond closing: the lender may exclude the payment from the debt-to-income ratio.
- In repayment, or deferment ending within twelve months: the lender counts the payment. If the credit report or servicer statement shows the actual payment, that figure is used. If no payment is shown, or it shows zero, the lender calculates a payment as a percentage of the outstanding balance — VA's method uses a set annual percentage divided by twelve.
- Income-driven repayment plans: the documented plan payment is generally accepted, though some lenders overlay the percentage-of-balance calculation when the payment is zero.
The student loan payment enters both of VA's tests — the debt-to-income ratio and the residual-income calculation described on the VA loan guidelines page. A borrower whose ratio is stretched by a large student loan payment may still qualify on residual income, which is exactly the kind of file VA underwriting is designed to look at as a whole. If the balance is the problem, paying a loan down to the point where the lender's calculated payment drops is sometimes cheaper than a larger down payment; a lender can run both.
For the rest of the qualifying picture — what counts as income on orders, how allowances are grossed up — see the orders-as-income and BAH pages. And for the credit side, the credit score answer covers what VA does and does not require.
Questions people also ask
- My income-driven payment is very low. Will the lender use it?
- Usually yes, if it is documented by the servicer and is the actual current payment. Some lenders still apply a percentage of the balance when the documented payment is zero. Ask how the specific lender treats it.
- Does the Public Service Loan Forgiveness program change anything?
- Not until the loans are actually forgiven. A pending forgiveness is not a payoff; the lender counts the current payment.
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