Paying off your student loans may take a long time, but that doesn’t mean you need to wait until they’re all settled before you can buy a home. While the amount of debt you have could impact your ability to get a mortgage, it’s still possible to make your homebuying dreams a reality as you’re chipping away at your student loans.

Can You Get a Mortgage With Student Loans?

It’s possible to buy a home with student loans, even if they aren’t paid off yet. However, your overall debt is one of the major areas of your finances that lenders will examine before approving you for a mortgage. If you have a high amount of debt relative to how much you’re earning, lenders might question if you can afford your monthly payments, which could make it more difficult to get a loan with favorable terms.

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How Student Loans Affect Your Mortgage

Even before you apply for a mortgage, making student debt payments every month can make it harder to save up for a down payment on a home. A larger down payment generally helps you score a better interest rate, so if you put down a small amount, you’ll likely end up with a more expensive mortgage. You’ll also have to pay for private mortgage insurance if your down payment is less than 20% of the home’s purchase price.

Another way that student loans can affect your mortgage is your debt-to-income ratio, which reflects how much of your monthly income is allocated toward paying off debt. This figure helps lenders determine whether you can afford the loan. You can calculate your DTI by adding up your monthly debt payments and then dividing that number by your gross monthly income. In many cases, your DTI must be 43% or lower in order to get a mortgage.

“If your payment history is great on your student loans, and you can support the student loan payments on your debt-to-income ratio, they don’t have any additional impact on qualification,” says Jonathon Kollman, vice president of sales at AmeriSave Mortgage Corp. in Plano, Texas.

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How To Get a Mortgage When You Have Student Loans

Even if you have student loans to pay off, you could still qualify for a mortgage. Here are some ways to increase your chances of getting approved.

Decrease your DTI

Lenders want to know how much of your income is taken up by debt payments. They aren’t as concerned about the total amount of debt you have, or whether that debt is from student loans, car loans, or credit cards.

If your DTI is too high, paying off existing debt before taking out a home loan could help boost your odds of approval. Increasing your income — like getting a raise at work or starting a side hustle — could also achieve this goal. The name of the game is proving to lenders that your other debts won’t get in the way of your ability to make monthly mortgage payments.

Student loan debt vs. credit card debt

Both student loan debt and credit card debt can affect your DTI. However, you’ll find that credit cards typically come with a much higher interest rate. From this perspective, paying down credit card debt first could help you pay less interest overall.

“Credit card debt is always the first debt you should pay down,” Kollman says.

Improve your credit score

Your credit is a major factor that influences whether you’ll be approved for a mortgage — and the interest rate you can get. Improving your credit score could help you secure a lower rate and save money on interest, while buying a home with no credit or poor credit usually means paying more for your mortgage in the long run.

These are some ways you can work on building your credit and increasing your score:

  • Establish your credit history. Having open and active accounts in good standing will help you prove yourself as a trustworthy borrower.
  • Make debt payments on time. A long history of timely payments is key to getting a higher credit score. Be sure to pay attention to all your debts, not just your student loans.
  • Pay off any overdue bills. Late payments can tarnish your credit file and cause your score to dip, so make sure you’re caught up on all your bills if you’ve fallen behind on payments.
  • Pay down credit card debt. Maintaining a low balance on your credit cards relative to their limits can result in a higher credit score.

Check out different loan types

Conventional mortgages are the most common loan type, but they require a minimum credit score of 620. If you don’t qualify for a conventional loan, you could look into other types of mortgages that have more lenient requirements due to government backing.

Here’s a look at some government-backed loan options:

  • FHA loans: These mortgages are backed by the Federal Housing Administration and allow for down payments as low as 3.5%, plus lower credit scores compared to conventional loans.
  • VA loans: This loan type is backed by the Department of Veterans Affairs and offered to current service members, veterans, and their surviving spouses. A VA loan allows qualified borrowers to make a low down payment or no down payment.
  • USDA loans: The U.S. Department of Agriculture backs these loans for low-income borrowers in rural areas and requires no down payment.

Keep in mind that these types of mortgages can cost more than conventional loans in the long run, so make sure to fully explore your options.

Consider finding a co-signer

If a trusted family member is in a secure financial position and willing to help, applying for a mortgage with a co-signer could increase your approval odds. A co-signer is another party who takes on the financial responsibility of repaying your loan if you don’t. Having a co-signer on the mortgage application can be beneficial for borrowers who are still paying off their student loans and have a high DTI.

However, a co-signer needs to fully understand what they’re getting into. If the borrower is no longer able to make payments, then the co-signer must take over paying off the loan — or else they will risk damage to their own credit.

Apply for mortgage preapproval

When you apply for preapproval, you provide the lender with information about your finances to see how much financing you could get. While a preapproval letter isn’t a final guarantee, it gives you an idea of what you can afford, given your current financial situation. So, this process can help you determine whether now is the right time to buy.

Keep in mind that preapproval letters typically have an expiration date of 30 to 60 days, so be prepared to begin house hunting once you’re preapproved.

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Is It Worth Buying a House When You Have Student Loans?

If you’re not in a rush to become a homeowner, then it could make sense to hold off on getting a mortgage until you’ve paid off your student loans and reduced your DTI. Waiting also gives you more time to boost your credit score and save for a bigger down payment. The combined effect could help you get a lower interest rate — and a less expensive mortgage overall.

However, this doesn’t mean that you can’t get a mortgage if you have student loans. According to Kollman, it’s possible and worthwhile to become a homeowner while you have student loan debt.

“Having a student loan is like having a car loan,” Kollman says. “As long as your debt-to-Income ratio allows for it, lenders do not see this as a ‘bad’ debt.”

Buying a home before paying off your student loans allows you to start enjoying the long-term financial benefits of homeownership — like building equity — sooner. Equity is the difference between your home’s value and how much you still owe on your mortgage. Having equity gives you more options, including the ability to take cash out to pay off high-interest debt or cover renovations.

So, if your DTI is low, your credit is excellent, and you have enough in savings for a large down payment, then it could be worth buying a home even when you’re still repaying your student loans.

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The Bottom Line on Buying a House With Student Loans

Student loan debt won’t automatically prevent you from getting a mortgage and buying a home — but it could make the process challenging and more expensive. Existing debt can be an obstacle to saving for a large down payment and also increase your DTI, both of which affect your qualifications as a borrower and the interest rates you could get. Depending on your financial situation, it might make sense to focus on paying down your student loans — and any other debts — before buying a home. But if you have excellent credit, a sizable down payment, and a low DTI, then you could consider the benefits of becoming a homeowner before your student loans are paid off.