I won’t make you wait for your answer: You can get a mortgage with defaulted student loans. But if you have defaulted federal student loans and you’re applying for an FHA Loan, VA Loan, or USDA Loan, you’ll need to get out of default before your application will be approved.
Here’s why: Your name will be listed in the Credit Alert Verification Reporting System (CAIVRS) until you do. This will prevent you from being approved for a mortgage.
Keep reading to learn how CAIVRS works, how your name got there, and your options for clearing CAIVRS before your closing date.
What is the CAIVRS System?
The Credit Alert Interactive Voice Response System is a database created by the U.S. Department of Housing and Urban Development (HUD) in 1987 to track defaults, delinquencies, and foreclosures related to other federal loan programs.
Information is sent to CAIVRS by several federal agencies, including:
- the Department of Education
- the Small Business Administration (SBA)
- the Department of Veterans Affairs (V.A.)
- the Department of Agriculture (USDA)
- the Department of Justice (DOJ)
CAIVRS uses your Social Security Number and other information to match you to debt for a federal lien, judgment, foreclosure, student loan, etc.
Before qualifying a borrower for a federally backed loan, the mortgage lender must use CAIVRS to screen the loan applicant. Typically, your lender will wait until you’re in the final stages of closing before they do a CAIVRS check.
As a result, many future homeowners don’t find out they’re in CAIVRS until their closing date is weeks away. Don’t let that happen to you.
- How do I suppress a CAIVRS report? You can ask for a CAIVRS suppression after you’ve resolved the delinquent federal debt with the agency, either by fixing the disputed information or by entering into a satisfactory loan repayment agreement. Each reporting agency has access to request the CAIVRS database and can request the CAIVRS suppression themselves.
- How long do student loans stay on CAIVRS? Federal student loans stay on CAIVRS until they are settled or back in good standing. Even if they are no longer on a credit report after 7 years, the CAIVRS system will have the record.
CAIVRS Report Codes
Ten-character CAIVRS confirmation code for the inquiry. The first character represents the type of credit issue, if any. See also the field description for Case Type.
- A - Approved by CAIVRS (no credit issue exists).
- B - Multiple cases from one or more Federal agencies found in CAIVRS.
- C - Claim filed.
- D - Default on loan.
- F - Foreclosure of loan.
- J - Judgment filed.
The database also lists a case number and type. The case type refers to the credit issue with the corresponding federal agency.
- Claim: Borrower has a claim filed on a loan from the federal agency listed.
- Default: Borrower defaulted on a loan from the federal agency listed.
- Foreclosure: Borrower's loan from the Federal agency listed was foreclosed due to nonpayment.
- Judgment: U.S. Department of Justice has filed a judgment against the borrower.
Can I check my own CAIVRS report?
You can’t check your own CAIVRS report. Only an FHA-approved lender or authorized user can check a homebuyer's CAIVRS report. The Department of Housing and Urban Development limit authorization to federal agencies and financial institutions.
How do I get a CAIVRS report? To get a CAIVRS report, you’ll need to ask your lender to verify your credit status in the database. Your lender won’t get a written report. Instead, once registered, they can access the prescreening CAIVRS Report database.
How do I get my name off of CAIVRS report?
You have four options to get your name off of the CAIVRS report for delinquent federal debts:
- Pay the balance in full. This is the fastest way to get your name off the CAIVRS report. Contact the agency to find out the payoff amount and then send payment. Once received, the agency will access the CAIVRS database and remove your name.
- Negotiate a settlement. The agency may be willing to waive the collection fees and interest as part of a settlement. Once the settlement amount is paid in full, the agency will remove your name from the report and give you a confirmation code.
- Set up a payment plan. Contact the agency that reported the delinquent debt and ask for a repayment plan. After you’ve made timely payments, you can apply for a new FHA-backed mortgage. For federal student loans, entering into the loan rehabilitation program won’t get your name off of the CAIVRS report until after you’ve made nine monthly payments.
- Request an exception. Although there’s no exception for student loan debt in default, there are exceptions to getting an FHA mortgage if you’re in CAIVRS due to bankruptcy, a debt your ex-spouse was responsible for, or you’re a disaster victim.
Contact Information for Incorrect CAIVRS Report
- HUD: Privacy Act Officer, Dept. of Housing and Urban Development 451 7th St. SW, CVB-4th Floor Washington, DC 20410
- Veterans Administration: VA Privacy Service | Phone: 202-273-5070
- USDA: Email: email@example.com | Phone: 800-428-9643
- SBA: See website for SBA program and field office contact information.
- DOJ: Office of Information Policy, Department of Justice, Suite 11050, 1425 New York Avenue, N.W. Washington, D.C. 20530-0001 | Phone: (202) 514-3642 (FOIA) | Fax: (202) 514-1009
Can I get an FHA mortgage with defaulted student loans?
First-time homebuyers can qualify for an FHA mortgage with defaulted private student loans. But if they’re in default with federal student loans, they have to first get out of default and clear the CAIVRS database before their mortgage lender can approve their FHA Loan application.
You may also want to consider a loan refinance. Keep reading for options on how to do that, fast.
Can I get a conventional loan with defaulted student loans?
You can get a conventional loan with defaulted student loans. Conventional loans are not backed by a federal agency, so they don’t require a CAIVRS report. But first, they’ll need to assess if you are a credit risk.
Before approving you for a conventional mortgage with a federal or private student loan in default, your lender will likely require:
- a good credit score (680+)
- a down payment
- a letter showing how you’re addressing the defaulted student loan (loan rehabilitation, settlement, repayment plan, etc.)
Note: Since Freddie Mac or Fannie Mae backs many conventional loans, you’ll want to check their student loan guidelines. Your student loans could negatively affect your DTI ratio.
How do I clear CAIVRS with student loans?
To clear CAIVRS, you need to resolve the debt with the reporting agency that sent your information to the database. For example, with defaulted student loans, that means contacting the Default Resolution Group and determining your options to get out of default. For an SBA Loan, you’ll need to establish a satisfactory written agreement with the SBA.
The head of the government agency or the agency’s chief financial officer is the only person who can grant homebuyers’ waiver requests. They have the discretion to grant your CAIVRS waiver request if your request meets specific guidelines and provides the information required by federal law.
What if the CAIVRS report is wrong? The FHA may delete erroneous CAIVRS information indicating that a borrower has defaulted on an FHA mortgage. You’ll need to contact the reporting agency and have them remove you from the system.
How do I get my student loans off CAIVRS?
The Department of Education offers student loan borrowers three options to get federal student loans off of CAIVRS:
- Negotiate a settlement
- Apply for loan consolidation
- Enter into the loan rehabilitation program
(Defaulted student loan forgiveness is another option if you’re permanently disabled.)
I give step-by-step instructions on all three ways to get out of CAIVRS in my premium guide, Clear CAIVRS Before Closing.
A federal student loan settlement will get you out of default in about 1-2 weeks. But depending on your student loan balance, a settlement can be expensive, and the full settlement amount will need to be paid in 90 days.
Most new home buyers apply for a consolidation loan to get out of default. You can consolidate your loans for free at studentaid.gov. The loan consolidation process usually takes about 2 to 3 months to complete and typically raises your interest rate.
However, I’ve been able to help clients complete the entire process in about 4 to 5 weeks by working directly with the servicer as a student loan lawyer.
3. Loan rehabilitation
Loan rehabilitation won’t help you if your closing date is near. Loan rehabilitation takes nine monthly on-time payments to get out of default. You don’t regain eligibility for an FHA mortgage loan until you make your 9th monthly payment.
However, it can be a good option for people who want to clear CAIVRS before starting the home-buying process.
How to request an FHA CAIVRS exception
If you or your lender believe the CAIVRS message is erroneous, contact the appropriate FHA Homeownership Center (HOC) for instructions or documentation to support your eligibility. The HOC can provide information on when the three-year waiting period will elapse or if the Social Security Number in CAIVRS is erroneous.
Be aware that removal from CAIVRS does not guarantee eligibility for an FHA-insured mortgage. You’re not eligible for an FHA-insured mortgage if you have an outstanding debt in delinquent or defaulted status with any federal agency.
So, for example, if you have a federal student loan in default that you don’t believe you owe, you’ll need to work with the Department of Education to prove the debt isn’t yours.
CAIVRS frequently asked questions
- Can I get a CAIVRS waiver for student loans? You can apply for a CAIVRS waiver for student loans from the government agency you’re applying to get a loan from. If you apply for a home loan from the Federal Housing Administration but are in CAIVRS for a loan owed to the U.S. Department of Education, you’ll have to request a waiver from the FHA, not the Department of Education. Note: I’ve never seen any home buyer successfully get a CAIVRS waiver.
- How long do student loans stay on CAIVRS? Defaulted student loans will stay on CAIVRS until you get out of default. Agreeing to make monthly payments on your defaulted federal student debt won’t remove you from CAIVRS. You have to get out of default using settlement, loan consolidation, or the loan rehabilitation program. Veterans who have applied for loan forgiveness due to disability will clear CAIVRS after the loan forgiveness application is granted.
- How long does it take to clear CAIVRS after a student loan is paid in full? It can take up to 10 business days to clear CAIVRS after a student loan is paid in full, either through settlement or consolidation.
- How long does it take to update CAIVRS? After getting out of default, it can take up to 10 business days to update the CAIVRS database.
Have more questions? I’ve walked dozens of people through the process. Get my guide to Clear CAIVRS Before Closing for comprehensive answers and step-by-step instructions to get out of CAIVRS and into homeownership.
What if the defaulted student loan isn’t on my credit report?
Some student loan defaults no longer appear on your Equifax, Experian, or TransUnion credit reports. That’s because it’s been more than seven years since you defaulted on the loan.
But even if your defaulted loans aren’t on your credit report, they can still stop you from getting approved for a mortgage backed by the federal government. Although your federal student loans don’t appear on your credit report, they’ll still appear in CAIVRS.
Private student loans that are in default don’t appear in CAIVRS. So if your private student loan debt isn’t on your credit report, then it shouldn’t stop you from getting a mortgage.
Closing soon and need to clear CAIVRS?
In most cases, your best options to clear CAIVRS before closing are student loan settlement and loan consolidation. You can try to do either of those things yourself, but you could risk losing your home by not fully understanding the process.
If you want to clear CAIVRS immediately, get my guide: Clear CAIVRS Before Closing. As a student loan lawyer, I’ve helped dozens of people in this exact situation.
Need personalized help? Schedule a free 10-minute call with me today. We’ll go over the right strategy for you and any alternatives that may be available to you so you can get your home.