How do you calculate the payment on a student loan if there isn't a loan payment on the credit report for Fannie Mae and FHA loans?

To calculate the payment on a student loan when there is no loan payment reported on the credit report for Fannie Mae and FHA loans, the standard practice is to use 1% of the loan balance. This approach provides a conservative estimate of the monthly payment that a borrower may need to make, as it likely aligns with typical repayment plans for student loans.

Using 1% of the balance helps lenders ensure that they are accounting for potential liabilities that borrowers may have regarding their student loans, even if no actual payment is reported. By applying this method, lenders can better assess the borrower's debt-to-income ratio, which is a critical factor in determining loan eligibility and creditworthiness.

In contrast, the other options do not reflect the conventional method endorsed by Fannie Mae and FHA. A payment calculated at 0.5% may underestimate the borrower's financial obligations, while 1.5% could lead to an overestimation, potentially affecting loan eligibility decisions. A flat fee would not accurately take into account the actual balance of the student loan and its potential impact based on different loan sizes. Thus, using 1% of the balance aligns with industry standards, facilitating more accurate financial assessments.