FHAThe Federal Housing Administration (FHA) will no longer treat applicants with student loan debt as generously as they once did when applying for a home loan. FHA instituted new rules under a revised policy that took effect Sept. 14.

Rather than ignore student loan debt deferred for at least a year, the FHA will now require that 2 percent of the student debt outstanding balance be counted when calculating the monthly debt-to-income (DTI) ratio that borrowers use to gauge ability to repay. For a borrower with a deferred student debt balance of $20,000, for example, FHA will include a $400 monthly repayment obligation when calculating the DTI.

FHA has traditionally been the go-to source for young homebuyers, but the new figure is now tougher than the 1 percent used by Fannie Mae and Freddie Mac.

Applicants with higher DTIs typically have a tougher time getting approval than people with lower ratios. Mortgage lenders and analysts say the student debt change, along with new rules on downpayment gifts, could make it more difficult for first-time home shoppers to buy houses.

In addition to tougher student loan debt calculations, FHA’s new policy will also take a closer look at employment gaps. “Under the new rules, borrowers will need six months on the job after an extended absence, regardless of the reason for the absence – even raising kids, which previously was deemed an ‘acceptable employment situation’,” says Craig Donofrio in a realtor.com blog.