New policies could make it easier for student loan borrowers to get a mortgage

By Jacob Passy | MarketWatch

Fannie Mae is working to address a supposed obstacle to homeownership for young adults

Fannie Mae is introducing new policies to address the hurdles student-loan debt can create when getting home financing.

While the jury is out on how significant a barrier student loan debt is to owning a home, Fannie Mae is looking to end the debate.

Fannie Mae FNMA, +7.28% the government-sponsored enterprise that buys and securitizes home loans, is introducing three new policies designed to make it easier for individuals with student loan debt to get a mortgage. The policies will provide lenders originating Fannie Mae-approved loans with more options for these borrowers, according to Jonathan Lawless, Fannie Mae’s vice president of customer solutions. “The next generation still aspires to homeownership,” Lawless said. “But they don’t know they can qualify.”

Fannie Mae is now officially offering a student loan cash-out refinance option nationwide. The housing finance giant began piloting this product, which lets homeowners pay off high-interest student debt through a home refinancing, last November with online personal finance company Social Finance.

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