Can I Buy a Home With Student Debt?

Can I Buy a Home With Student Debt?

A survey from the National Association of REALTORS® found that 51% of non-homeowners are delaying buying a home due to student debt. However, you CAN get a mortgage while still having student debt. Here’s a breakdown of the current student loan situation and a few tips to help make your homeownership dream happen.

• President Biden announced in August that he would cancel $10,000 in student loan debt for those earning less than $125,000 per year. This includes an additional $10,000 for those who received Pell grants for low-income students.
• Student loan payments have been paused since March 2020 but are scheduled to resume in January 2023.

Here are a few tips that could help make your dream of homeownership happen soon rather than later:

Lower Your Debt-to-Income Ratio.

To calculate your debt-to-income ratio, add up all of your monthly debt payments and divide them by your gross monthly income.

• Step 1

• Step 2

Divide the total by your gross monthly income, which is your income before taxes.

•  Step 3

Calculate the total which will be in the form of a percentage. A lower DTI is considered less risky for lenders.

You can improve your debt-to-income ratio in three ways: Make more money, spend less money, and pay down your debt. Don’t stress about finding multiple side hustles, just simply live within your means!

Improve Your Credit Score

A credit score is simply a grade based on how well you pay your bills.  Pay your bills on time, catch up on past-due accounts, and use less than 30% of your credit limit are just a few things you can do. A great mortgage lender can help guide you through the process of improving your credit score. Reach out to us for a recommendation!

Down Payment Assistance

 This program offers loans or grants to help you pay the down payment on a home. There are credit score and income requirements to qualify and, in some cases, you must be a first-time home buyer. The eligibility rules vary so reach out to your trusted mortgage lender for more details.

Co-Borrower

When using a co-borrower, their debt-to-income ratio and their credit history help strengthen your financial qualifications. Most co-borrowers are family members, but they do not need to be related to you. Your lender will just need proof that the co-borrow can pay your mortgage if you don’t.

We Can Help!

It’s not a quick process but it is possible. Reach out to us and we will help connect you with a mortgage lender who can coach you through the process and, as your Realtor, we will work as a team to help you plan and prepare for homeownership.