- Student loan payments raise your debt-to-income ratio and can limit your VA loan amount.
- Deferred loans may be excluded from DTI, but loans in forbearance or default usually count against you.
Whether you're fresh out of school or have been out for a while, there is an important question you need to address when applying for a VA home loan: How much student loan debt do you have?
If you have some, you're not alone. But like many other Americans, you’ll need to understand how student loan debt will impact your VA loan, specifically how it affects your debt-to-income ratio when buying a home.
Debt-to-Income Ratio and Student Loans
Like any other debt, your student loans are considered when calculating your debt-to-income (DTI) ratio. Since federal student loan payments officially resumed in May 2025, many borrowers are now seeing those monthly payments reflected again in their DTI calculations, sometimes for the first time in years.
This renewed obligation can reduce your borrowing power, especially if your student loan payment is high or you're not enrolled in an income-driven repayment plan. Your DTI ratio considers your gross monthly income compared to your monthly debts and is an important metric for VA lenders.
Ideally, you want your monthly expenses, including the estimate of your home loan, to be at or below 41% of your monthly income. There are some exceptions that allow you to exceed this, but you should aim for this benchmark.
Let's say you make $5,000 a month and have the following debts:
- Estimated house payment with taxes and insurance is $1400
- Student loans are $250
- Credit card is $50
- Car payment is $300
Your DTI ratio would be the sum of those debts ($2,000) divided by $5,000, which equals 40%.
If your student loan payment was $300 more expensive, your DTI ratio would climb to 46%, which is not ideal. While that doesn't mean you can't qualify for a VA loan, it could impact how much you’re able to borrow. A higher DTI ratio can reduce your preapproval amount, making it harder to qualify for the home price range you originally had in mind.
In some cases, a loan officer will factor in compensating factors to offset a high DTI ratio. Some of the more common compensating factors include a high credit score, good credit history or additional income in your household.
Showing the ability to save is also a strong compensating factor. This typically means having multiple months of future mortgage payments in an accessible account like a checking or savings account.
If you're worried that student debt could limit how much you can afford, one of our credit consultants can help you strengthen your financial profile and get back on track with the VA loan process.
Student Loan Default, Deferment and Forbearance
If you have student loans but aren't currently paying them, your loans will fall into one of three categories: default, deferment or forbearance. If you are in default, meaning you’ve stopped making your required student loan payments, then it’s unlikely you’ll qualify for a VA loan.
Borrowers in default on federal student loans are not eligible for most mortgage programs, including VA loans, unless they resolve the default through rehabilitation or consolidation. If your loans are in deferment or forbearance, the lender does not require you to make monthly payments at this time.
Is one better than the other? Simply put, yes. It's better for your mortgage application if your student loan is deferred.
Deferment occurs under circumstances approved by the lender, most commonly enrollment in school. With deferment, your student loan principal and interest payments are put on hold. Your lender will likely not include your student loan payments in your DTI ratio if you can show that they'll be deferred for at least 12 months after your closing date.
More: CAIVRS: How Default on Federal Debt Impacts Your VA Loan
Forbearance Can Be a Problem for VA Loans
Forbearance is a temporary agreement between you and your loan servicer that allows you to reduce or pause student loan payments, usually due to financial hardship. However, interest typically continues to accrue during the forbearance period.
Forbearance is often tied to financial hardship or unemployment, which can raise concerns during VA loan underwriting. Since student loan payments restarted, many loans that were in COVID-19 forbearance have now transitioned into active repayment.
If you’re not currently making your student loan payments, mortgage lenders may worry about your ability to make timely mortgage payments. To account for that risk, VA lenders will typically include the full monthly student loan payment in your DTI ratio, even if those payments are temporarily paused under forbearance.
Student Loan Forgiveness
As the student debt crisis continues to be dealt with and new solutions emerge from the government, more opportunities to lighten your student loan debt are becoming available. There are a number of ways for your debt to be forgiven. For a full breakdown, check out the Department of Education's Forgiveness, Cancellation and Discharge Program.
Military members may qualify for PSLF, IDR forgiveness or specific student loan repayment programs through the DoD. The Segal AmeriCorps Education Award is available to AmeriCorps members but is not military-specific.
If you're considering a home purchase, reach out to a Veterans United VA loan expert at 855-870-8845 to discuss how your student loans will play in the homebuying process or get started online today.
How We Maintain Content Accuracy
Our mortgage experts continuously track industry trends, regulatory changes, and market conditions to keep our information accurate and relevant. We update our articles whenever new insights or updates become available to help you make informed homebuying and selling decisions.
Current Version
Oct 7, 2025
Written BySamantha Reeves
Reviewed ByTara Dometrorch
Updated article due to student loan payments resuming in May 2025. Content reviewed and fact checked by team lead underwriter Tara Dometrorch.
Veterans United often cites authoritative third-party sources to provide context, verify claims, and ensure accuracy in our content. Our commitment to delivering clear, factual, and unbiased information guides every piece we publish. Learn more about our editorial standards and how we work to serve Veterans and military families with trust and transparency.
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