Can I Qualify for a Mortgage While I’m Still Paying for Student Loans?

Can I Qualify for a Mortgage While I’m Still Paying for Student Loans?

Are you among those who dream of having a place to call home while wrestling with student loans? You're not alone! According to Forbes, as of 2023, there were more than 26.2 million Americans who are out of school but carrying a collective student loan debt of $1.14 trillion. Many folks face the challenge of juggling student debt while aiming for a piece of the homeownership pie. The good news is, with some savvy financial moves and a solid game plan, you can make that dream come true. We're diving into 9 different ways to help you score a home loan even if student loans are on your plate.

1. Get to Know Your Student Loans

Start by rounding up all your student loan paperwork. Keep tabs on crucial details like your total debt, monthly payments, and those pesky interest rates.

2. Do the Math: Debt vs. Income

To find out if you can swing a home loan, it's time for some numbers. Add up all the cash you shell out each month – think student loans, credit cards, and auto payments. Then, divide that by your monthly income. Voila! You've got your debt-to-income ratio (DTI). A DTI under 43% is your ticket to homeownership bliss.

3. Boost Your Credit Game

  • Your credit score is the MVP of mortgage approval. Keep it in top shape!
  • Pay your bills on time like a champ to show your financial responsibility.
  • Trim those credit card balances down – lower credit card usage can give your credit score a sweet boost.
  • Hold off on opening new credit lines for now; they can be a score buzzkill.

4. Consider Income-Driven Repayment

If your student loan payments are giving you a headache, Uncle Sam has a trick up his sleeve. Check out income-driven repayment plans from the government. These plans base your payments on your income, which can help lower your DTI and free up cash for your mortgage.

5. Save Up a Beefier Down Payment

Ready to flex your savings muscles? Make a budget and cut back on non-essential spending. A larger down payment can counterbalance a higher DTI by shrinking your borrowing needs.

6. Think About a Wingman (or Wingwoman)

If your credit score or income is playing hard to get, it might be time to call in the cavalry. Find someone with a solid credit history and steady income to co-sign your loan application. Teamwork makes the dream work!

7. Target High-Interest Debt First

Got a bunch of different debts? It's like a game of financial Whack-a-Mole – smack those high-interest debts first! Lowering high-interest debt not only pumps up your DTI but also saves you moolah on interest – money you can put towards your dream home.

8. Government Mortgage Magic

Uncle Sam's got a bag of tricks for homebuyers, including FHA and USDA loans. These loans often have smaller down payment requirements and are more DTI-friendly – perfect for those grappling with student loans.

Scoring a home loan while juggling student loans may seem like a tall order, but it's doable. Get a grip on your finances, amp up your credit score, explore repayment options, and hang in there. With determination and savvy financial moves, you'll be well on your way to turning the key to your very own home. So, start today, and before you know it, you'll be unlocking the door to your homeownership adventure!

Questions? Give us a call today!