VA Student Loan Rules: What Veterans and Active Duty Need to Know

 


Hey my fellow Veterans and Active Duty — did you know VA has its own rules for student loans? Don’t assume you’re blocked from buying!

One of the biggest myths I hear from Veterans and Active Duty borrowers is: “I can’t buy a home because of my student loans.” That’s simply not true. The VA loan program has its own calculation methods for student loan payments, and in many cases, it’s FAR MORE FLEXIBLE than Conventional or FHA loans.

How VA Handles Student Loans

  • Deferred Loans: If your student loan payments are deferred for 12 months or more, VA guidelines may allow you to exclude them from your debt-to-income (DTI) ratio.

  • Income-Based Repayment (IBR): VA typically uses the actual payment amount shown on your credit report, even if it’s $0 under an income-driven plan.

  • Standard Loans: If there’s no clear monthly payment, VA lenders may calculate one at 5% of the outstanding balance divided by 12 months — but this is often more favorable compared to other loan programs.

The End of Covid Forbearance: What Changed

For years, federal student loan payments and interest were paused due to Covid relief. But that relief has officially ended:

  • The 0% interest rate on federal student loans ended September 1, 2023.

  • Loan payments restarted in October 2023.

  • Federal student loan collections (for loans in default) resumed May 5, 2025.

What this means & what to check

  • If you have federal student loans, you’re expected to make payments now (unless you qualify for an alternate plan or deferment/forbearance under other criteria).

  • If your loan was in default, the paused collections have resumed.

  • Some relief or transition programs (“on-ramps”) were in place to ease borrowers back into repayment — but those are temporary.

Why This Matters for VA Borrowers

Student loan debt can feel heavy, but here’s the good news:

  • VA’s rules are often more flexible than Conventional or FHA.

  • Even with repayment restarting, VA looks at your actual payment — not an inflated estimate.

  • Veterans and Active Duty can still qualify for the home they want, even with student loans.

Example Scenario

A Veteran with $50,000 in federal student loans under an income-driven plan shows a $45 monthly payment on their credit report. Under Conventional guidelines, the lender might assign a $500 monthly debt against them. Under VA guidelines, that $45 can be used — dramatically improving their ability to qualify.

Bottom Line

If you’ve been told student loans block your ability to buy, it’s time for a second opinion. VA has its own rules — and they’re designed to help Veterans and Active Duty achieve homeownership, not hold them back.

About Between Two Doors
Between Two Doors is a podcast where I talk with Realtors about their journey, aiming to connect home buyers and sellers with agents on a more personal level. I ask "right brain" questions that go beyond transactions, focusing on the experiences, values, and passions that make these professionals great at what they do.

Listen to more episodes at: https://www.betweentwodoors.com

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