Have Student Debt? Here's How You Can Buy A Home

Have Student Debt? Here's How You Can Buy A Home

If you were born between 1981 and 1996, you are part of the most college educated generation compared to generations in the past. You may recall being told that a college education is essential to career advancement and wealth.

The final word on whether college was absolutely necessary is a personal matter. But one thing we can all agree on is that student debt can be a burden. So much so that housing experts say that student debt may be the cause for a drop in homeownership.

While student loan debt poses a hurdle to homeownership, there are things you can do to make it easier. Here are our best tips for buying a home with student debt:

Focus on your credit score.
Student debt may not be the only hurdle you have to buy a home. Your credit score could also hurt your chances. Your credit, or FICO score, is what's used to determine not only if you qualify for a mortgage but also the amount and at what interest rate. If your credit score is too low or you have a credit history that's plagued with late payments, then you might be out of the running for a mortgage.

That's why our first tip is to work on building and repairing your credit. Learn your score and then start now to take the necessary steps to increase your credit score.

Work on your debt-to-income ratio.
Another factor looked at when applying for a mortgage is your debt-to-income ratio. This number is used to determine whether you can afford to carry the additional debt of a mortgage payment. Essentially, can you pay your mortgage every month?

To raise the ratio, you'll want to increase your monthly income and lower your debt. You can focus on one or the other, but we recommend doing both. Taking a side gig to earn a few hundred a month and using a portion of that to pay off debt can make a BIG difference pretty quickly.

Research down-payment programs.
Even with student loan debt, there several down payment assistance programs that you may qualify for. Government loans like FHA, USDA, and Veteran home loans have many perks, including down payment assistance.

Apply for a mortgage.
This tip may seem out of place, but there's no better way to know how close you are to buying a home than to apply to see where you stand. When you get pre-approved, we can give you a better picture of your financial standing. We'll also give you personalized guidance as to what would make the most significant impact on your home loan-worthiness.

Whether student debt, credit debt, bankruptcy, or poor credit, having the answers to your homeownership obstacles puts the power back in your hands. When you know the big picture and have a solid plan based on facts, you'll see how close you actually are to buying a home. Who knows --you may qualify for a low rate RIGHT NOW. Contact us today to get mortgage answers and guidance.


Back to Learning Center

Visit Our Customer Reviews