Q&A – Construction Loan question with student loans

I am trying to figure out if my wife and I can qualify for a construction loan. We both have a very large amount of student loans that are being paid on income based plans. I most most mortgages, other than Freddie Mac, will use 1% of total balance of loans when calculating DTI. This makes our DTI very high. If using our income based payments, it isn’t bad. Can someone tell me what lenders who deal with construction loans typically use to calculate DTI?
Thanks!

J. Scott Harris, “jscottharris”Lender

The land being given will be considered a “Gift of Equity” and works the same as making a down payment. The appraisal will confirm the value per acre and the amount that the land can be credited toward your equity investment.

Rather than counting the 1% of the balance, you might be able to have the student loan company redo your payments to a “fully amortizing” payment over 20 to 30 years. It will be more than your income based plan, but a lot less than 1%. Making this change might make the difference in qualifications.

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