Is Student Loan Debt Holding You Back From Buying a Home?

If student loans are making you think homeownership is out of reach — you’re not alone. But here’s the good news: student debt doesn’t automatically disqualify you from buying a home.

💡 Most first-time buyers have some level of student debt. What matters more to lenders is your debt-to-income ratio (DTI) — not just your loan balance.

What Lenders Really Look At

Lenders focus on how much debt you’re paying each month vs. how much you earn. This includes student loans, credit cards, car payments, etc. Ideally, they want:

• Housing costs under 28% of your gross monthly income.
• Total monthly debt under 36%.

Even if you have a good credit score, a high DTI can hold you back — but you can take steps to improve it.

Lowering Your DTI

✅ Talk to your student loan servicer — ask about:

• Graduated repayment plans
• Loan consolidation
• Extended repayment terms

✅ Reduce other debts or increase your income:

• Consider part-time work or freelance gigs
• Use public transit instead of taking on a car loan
• Ask your credit card provider if you can lower minimum payments

Shop Smart for Lenders

Not all mortgage lenders are the same. Work with one who understands how to handle student loan debt. Some lenders go by your monthly payment, while others use your total loan balance — which can make a big difference.

Look into first-time buyer programs, especially:

• Fannie Mae HomeReady – Up to 50% DTI with 3% down
• VA Loans – Great for military with flexible DTI options
• FHA Loans – May accept DTIs over 43% on a case-by-case basis

Are You Ready to Buy?

Ask yourself:

• Do I have steady income and plan to stay in the area for 5+ years?
• Am I paying my student loans on time?
• Have I saved some money?

You might need to start with a more modest home or different location — and that’s okay. Focus on getting your first home, and build from there.

🏡 Fun fact: Some of our clients have used the equity from their first home to help pay off student loans completely!

---

Let’s talk if you’re unsure where to start or whether buying is right for you. We’ll help you create a plan that fits your situation — student loans and all!

And feel free to share this with a friend who’s thinking about buying a home too or sign up for my Home Buying Newsletter.