Can You Buy a House With Student Loan Debt?
Juggling routine financial responsibilities alongside student debt is already difficult. What if you want to expand your horizons or your family’s living space, though? Can you buy a house with student loan debt?
Altitude Home Loans’ mortgage lenders in Tucson, AZ, say it’s possible. Learn more below.
What To Expect When Purchasing a House With Student Loan Debt
Many people struggle with considerable student debt after college. Higher education is incredibly expensive without the debt burden. It’s hardly surprising that covering tuition through loans racks up a breathtaking bill.
How can you buy a house with student loans if you’re still not out of the woods? Here are a few ideas from our debt experts.
Debt-To-Income Ratio
Your debt-to-income ratio refers to the loans you pay monthly versus your monthly income. If you want to buy a house with student loans still outstanding, your mortgage lender will look at your DTI and student loans to decide whether your current income will adequately cover the required repayments.
Will you make the cut? Research the average DTI for the lenders you’re applying to for the mortgage loan.
Credit Score Checks
Your credit score showcases whether you responsibly and punctually repay your debts over the years. It also shows how often you depend on your credit to cover certain costs.
Credit dependency habits are one of the ways student loans affect home-buying prospects. Potential lenders will examine your credit score as proof that you have a history of paying off debts in a timely fashion and low credit purchases. A strong score demonstrates discipline, proving you aren’t a default risk.
Interest Rates
So, can you buy a house with student loan debt? Well, can you afford the interest rate? Mortgage repayments include interest and may fluctuate with the mortgage type.
Excellent creditworthiness might achieve lower rates, translating into lower monthly payments. However, a low credit score with extensive debt will mean higher rates.
Default History
Ever missed a student loan payment? You have a default history.
If you can put enough distance between your defaults and your closing timeline, you might improve your credit profile. However, defaulting on any loan can impact your credit score and lower your chances of qualifying for homeownership with student debt.
How Can You Buy a House With Student Loan Debt?
Did you know that you can qualify for a mortgage with student debt? It takes a bit of strategy, but it’s possible.
Your financial plan should include the following:
- Save money.
- Increase your monthly income where possible.
- Focus on paying down current debts, especially smaller ones.
- Improve your credit score by dropping bad financial habits.
- Explore mortgage lenders who aren’t opposed to student debts.
Can you buy a house with student loan debt? If you can reach the above-listed goals within the next five years, there’s a chance.
Chat With Altitude Home Loans in Tucson, Arizona
If you’re hoping for a house in Tucson, why not let Altitude Home Loans have a look at your financial profile? Read these mistakes of homebuyers so that you can avoid them. Then, call us at 520-500-1010!