Finance
Vermont borrowers with student loan debt may find it affects their mortgage qualifying because:
AStudent loans are always excluded from Vermont mortgage underwriting
BMonthly student loan payments are included in the borrower's total debt-to-income ratio calculation✓ Correct
CVermont banks do not make loans to anyone with student debt
DStudent debt disqualifies borrowers from FHA loans automatically
Explanation
Student loan payments (including income-based repayment plans) are counted in a borrower's total DTI ratio for mortgage qualifying. Vermont buyers with significant student debt may find their purchasing power reduced.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
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