Can You Buy a Home With Student Loan Debt? Yes—Here’s How

By Traci Frasier

Director of luxury and residential sales, Broker Associate

Can you still buy a home if you are carrying student loan debt? The short answer is yes. In fact, many people do. However, there are several important details you should understand before applying for a mortgage, so you’re not caught off guard. Student loans do not automatically disqualify you from purchasing a home, but they can impact key areas of the mortgage approval process. Here’s everything you need to know.

Your DTI matters. One of the main considerations is your debt-to-income ratio (DTI). Lenders want to make sure your monthly debts, including your future mortgage payment, do not exceed 45 percent of your income. A high ratio can make approval more difficult. It can also affect your mortgage interest rate. More debt may be seen as a higher risk, which could lead to a higher rate and reduce how much home you can afford.

Credit score is a deciding factor. Your credit score is another factor. If you are behind on your student loans or in default, it may significantly lower your score and make it harder to qualify for a loan. For example, if you can afford $2,000 a month for housing at a 6% rate, that translates to a home worth about $333,000. If your interest rate rises to 7% due to student loan-related risk, your budget could drop to around $300,000.

If that sounds discouraging, there is good news. You have options to improve your chances.

You can pay down your debt to reduce your debt-to-income ratio and raise your credit score. You can also bring in a cosigner with strong credit to help strengthen your application. In addition, you may be eligible for down payment assistance, which can reduce the amount you need to borrow. If your loans are in default, consider reapplying or consolidating to regain eligibility.

The bottom line is that having student loans does not mean homeownership is out of reach. It simply means you need to approach the process with clear information, smart planning, and the right strategy.

If you have questions about how your student loans might affect your mortgage options, I am happy to walk you through what is possible based on your current situation. You can call me at 830-377-0904 or send an email to traci@legacybrokergroup.com. I look forward to hearing from you.