Key Takeaways
- Plenty of people with student loans also own their own home.
- Calculate your debt-to-income ratio to figure out what you can afford.
- An experienced team will help you navigate buying a home with student loans—contact Linda Craft & Team today!
When it comes to purchasing a home, having student debt makes the dream of homeownership sound like an impossibility. But do you have to wait until they’ve paid off your loans entirely before buying your first home? Or could you still qualify for a home loan with that debt?
The good news is that having student loans does not mean you can’t get a mortgage loan, too. While everyone’s situation is unique, your goal may be more within your reach than you realize. Let’s look at some recent data as you explore your options and prepare to take your next steps.
Many people think homeownership is out of their reach—and they’re wrong!
As a significant percentage of the population, Millennials entering the real estate market for the first time are bringing their student loan debts along with them. Unfortunately, many of these first-time homebuyers believe that their student loan debts mean they have to put their dreams of homeownership on hold.
According to data from the National Association of Realtors (NAR), 51% of non-homeowners believe their debts are substantial enough to keep them from purchasing a home. When asked why their student loans are delaying their plans to buy a home, three key themes emerged:
- 47% think their student loans make it harder to save for a down payment
- 45% think they can’t qualify for a home loan because of existing debt
- 43% think the delay is necessary even though they’ve never applied for a mortgage
No matter the explanation, it’s essential to know that having student loan debt by itself is not a reason to delay purchasing a new home. Here’s why.
Your debt-to-income ratio is the measure that matters most
The same NAR report shows that roughly 40% of current homeowners have approximately $30,000 in student loan debt. While student loans themselves are not a barrier to obtaining a mortgage, it ‘s important to know your debt-to-income (DTI) ratio.
Most lenders will approve a mortgage if an applicant’s DTI ratio is below 43%. Ideally, it should be at or under 36%, with the maximum for monthly mortgage-related payments under 28%, experts say.
The key takeaway is, for many people, homeownership is achievable even with student loans, as long as it’s within a reasonable budget.
The best way to decide your next steps is to talk to the professionals. A real estate advisor can walk you through your specific situation, options, and what has worked for other buyers. You don’t have to figure this out on your own! Lean on the experts and get the information you need to make an informed, confident decision.
Start Your Home Buying Journey Today!
Even in a historic market, with the right team by your side, you can make your dreams of homeownership a reality. Rely on the experienced agents that know the area and the entire process. Contact Linda Craft & Team today at 919.235.0007 to make your biggest move yet.