Going to college and buying a home are both important milestones, but student loan debt might make them feel like conflicting goals. Luckily, you can pursue both higher education and homeownership by understanding how loan debt might affect your mortgage.

Read on to learn how student loans factor into getting a mortgage and get some tips for buying a house when you have student loans.

Can You Get a Mortgage with Student Loan Debt?

Yes. You can get a mortgage when you still have student loan debt. In 2020, 37% of first-time home buyers[1] had some student debt. Student loans aren’t a deal-breaker, but like any form of debt, having a student loan will probably impact your ability to get a mortgage loan.

Luckily, there are ways to increase your ability to get a mortgage when you have student loans, such as improving debt-to-income ratios and upping your credit score.

How student loans affect a mortgage application

So how does having a student loan affect getting a mortgage? It can be both negative and positive.

Having student loans can make it harder for you to get other loans because a mortgage lender will take note of existing debt, especially if it’s a large amount. Lenders figure out if you have too much debt – or will have it with a new loan – by looking at your debt-to-income (DTI) ratio. (We’ll explain more about DTI later.)

However, existing loans can also show that you know how to handle debt and make consistent payments, which is a positive.

How co-signing a student loan affects buying a house

You may also be wondering how student loans affect a co-signer’s ability to get a mortgage. Because the co-signer is equally responsible for the loan with the primary student loan borrower, their ability to get a mortgage is influenced in the same way.

The key difference is the co-signer takes on the risk of not being entirely in control of how the debt is handled. If the primary borrower misses payments, it negatively affects the co-signer, too.

What Should You Know About Buying a Home With Student Loan Debt?

Student loans can be one of the largest debts a home loan applicant has, which impacts some of the factors lenders consider when evaluating you for a mortgage loan.

Here are some of the major factors that come into play when buying a house, and how having a student loan can influence the process.

Credit score

Your credit score is one of the most important pieces of information a mortgage lender uses when evaluating you as a borrower. Debt, such as student loans, has a large impact on your credit score, which can influence not only your eligibility for a loan, but the terms, including the interest rate.

But that impact isn’t necessarily negative. A long-term loan can create a strong payment history if you make timely payments, and it can diversify your credit mix. Both factors have positive influences on your credit score.

But having more debt can also hurt your credit score, and if you do miss payments, your score can suffer. It can be more difficult to get a mortgage approved if you have student loans and a poor credit score.

Debt-to-income ratio

Your debt-to-income (DTI) ratio is the relationship between your cumulative monthly debt payments and your gross monthly income. It’s calculated by dividing your debt by your income.

For example, if you pay $300 a month toward debt and make $2,000 a month, your DTI is 15%. A good DTI is typically 36% or lower.[2]

Mortgage lenders use DTI to make sure you can handle the addition of new debt payments. If you’re already using a lot of your paycheck on other debts, you probably won’t have the funds to cover more debt payments, making the loan risky. It can also increase the interest rate a mortgage lender will give you.

Student loans increase your overall monthly debt payments, which increases your DTI. This can affect your ability to get a mortgage, especially if you have other debt payments like an auto loan.

To figure out your DTI, try using our DTI calculator.

Saving for a down payment

Student loans can affect your ability to save for a down payment, making it more difficult to get a mortgage.

It’s generally a good idea to save as much as you can for a down payment so you need to borrow as little as possible, especially when you already have loan debt. Making a larger down payment can reduce the amount of interest you pay.

It can also increase your chances of getting approved for a home loan by lowering your loan-to-value (LTV) ratio.

But the constant drain of student loans makes saving for a down payment all the more difficult. Every student loan payment is money that could have gone into savings, which means you’ll probably either have a smaller down payment or have to save for a longer period.

How Can You Improve Your Odds of Getting a Mortgage Despite Student Loans?

If all these negative factors are making a mortgage loan seem like too tall a mountain, don’t worry. There are steps you can take to cut down the impact of student loans and make the mountain a little shorter.

Improve your DTI

Improving your DTI can make you a better bet to a mortgage lender while it helps you prepare to take on the new expense of a home loan payment. Take some time to calculate your DTI and learn the steps you can take to lower it.

Pay off revolving debt

Paying off revolving debt like credit cards will go a long way. Carrying a balance on your credit cards tends not to be good for your credit score. A missed credit card payment not only reflects poorly on your credit score, but it can incur interest charges and fees – more money that could be going toward a down payment on a home.

This doesn’t mean closing your credit cards. The available credit you have to borrow compared to how much you borrow is called credit utilization. This has an impact on your credit score, too, and aiming for lower credit utilization can be beneficial.

Manage your student loans effectively

Attacking your student loans effectively and paying them off lowers the impact they have when you apply for a mortgage. Be strategic with your finances and make larger payments toward your student loan balance when you can.

Avoid missing payments at all costs – literally. Skipping a student loan payment is double trouble because you aren’t lowering your debt and you’re probably hurting your credit score.

Explore student loan repayment plan options

You have a lot of student loan repayment plan options to help make your debt more manageable. If you can lower how much you have to pay each month, you can lower your DTI, making a mortgage loan easier to obtain. It can also help you save for a down payment.

Research options for a student loan repayment plan that will work for you. Some options are income-driven repayment plans, which means your monthly payment is based on your income and what you can comfortably afford. You’ll still decrease your student loan balance over time, just on a different schedule.

Research different mortgage options

Exploring different mortgage options can help you make an achievable home buying plan and ensure you get the best deal. There are many programs to help home buyers – especially first-timers. Here are a few places to look to get you started:

  • Federal Housing Administration (FHA) loans
  • U.S. Department of Agriculture (USDA) loans
  • Fannie Mae / Freddie Mac conventional loans
  • First-time home buyer programs

You’ve Got the Smarts, Now Get That Home

You don’t have to choose between paying off student loans or buying a house. Even with student debt, you can get a home loan. Improving your credit score, lowering your DTI and finding the best mortgage options can help you achieve your homeownership goals.


  1. National Association of REALTORS®. “The Impact of Student Loan Debt.” Retrieved March 2022 from https://www.nar.realtor/sites/default/files/documents/2021-the-impact-of-student-loan-debt-report-executive-summary-09-14-2021.pdf

  2. Fannie Mae. “B3-6-02, Debt-to-Income Ratios (02/05/2020).” Retrieved March 2022 from https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B3-Underwriting-Borrowers/Chapter-B3-6-Liability-Assessment/1032992131/B3-6-02-Debt-to-Income-Ratios-02-05-2020.htm



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