Buying a Home With Student Loans: What You Need to Know

Student loans are back in the news and might be weighing on your mind if you’ve been following the headlines recently. If you’re wondering what your student debt means for your homeownership plans, there’s one important thing to remember:

Having student loans does not automatically mean you can’t buy home.

The Biggest Myth About Student Loans and Mortgages

Many first-time buyers believe they have to completely pay off their student loans before they can qualify for a mortgage.

In most cases, this isn’t true.

According to a Redfin article, student loans are usually evaluated by lenders in the same way as other standard debts, such as car payments or credit cards:

“Yes, you can get a mortgage with student loan debt. Lenders primarily assess your debt-to-income (DTI) ratio, which compares your monthly debt payments, including student loans, to your gross monthly income. Having student debt doesn’t automatically disqualify you if your DTI is within acceptable limits.”

A student loan on your credit report is not an automatic disqualifier. Instead, lenders look at your broader financial profile, including your:

• Income
• Monthly debt payments
• Credit history
• Overall financial situation

Your student loans matter, but they don’t tell a lender the whole story.

Many Homebuyers Have Student Loan Debt

To really put things into perspective, data from the National Association of Realtors (NAR) proves that you can have student debt and still buy a home.

According to NAR’s research:

• 33% of first-time homebuyers still had student loan debt when they purchased their home.

• That translates to 1 out of every 3 first-time buyers.

• The median amount of student loan debt they owed was $30,400.

Let this reassure you that people are successfully buying homes with student debt every single day. Carrying student loans may affect how much you can borrow, but it doesn’t mean homeownership is beyond your reach.

Explore Your Mortgage Options First

A lot of potential buyers trip themselves up right at the starting line. They assume the worst regarding their loan eligibility and never check what they could actually qualify for. But your financial situation is unique and deserves some exploration.

If your income is steady and your overall finances are in decent shape, buying a home could be far more realistic than you think. The only way to know is to review the numbers with a qualified mortgage professional. You might discover you’re much closer to buying a house than you thought.

Bottom Line

Student loans don’t have to stop you from owning a home. If you’ve been putting off your homebuying plans because of debt, talk to a lender about your options. It may not be the roadblock you think it is.

Contact our team today to connect with trusted local lenders and start exploring your real estate options.