If you’ve been thinking about buying a home but worry your student loan debt will stop you, you’re not alone. Many people believe their student loans are too large to qualify for a mortgage. But in reality, buying a house while managing student loan payments is more possible than most people think.
Let’s walk through how you can manage your monthly debt and still get approved for a mortgage loan.
Millions of Americans carry student loans. Whether you took out federal student loans or private loans, the debt load can feel heavy—especially when you’re also thinking about mortgage eligibility.
But here’s a key fact: most lenders don’t look at your total student loan balance. They care more about your monthly student loan payments and how they affect your overall debt to income ratio. This is the figure that compares your total monthly debt payments (including auto loans, credit card debt, and student loans) to your gross monthly income.
If your monthly debt is low compared to your income, you may still qualify for a mortgage with student loan obligations. This is why understanding your debt to income situation is so important.
You might hear financial experts talk about “good debt.” That may sound strange—how can debt ever be good? But in some cases, debt helps build your future.
Student loan debt is often considered “good debt” because it helps you increase your lifetime income. Similarly, mortgages are good debt because they allow you to buy a home, which can grow in value and help build long-term wealth.
On the other hand, high-interest credit card debt and unnecessary personal loans usually count as “bad debt.” These don’t increase your income or financial security.
So if you’re worried about getting a mortgage when you have student loan obligations, remember: you’re managing a type of debt that can actually help you qualify, not hurt you.
One of the best things you can do before applying for a mortgage loan is to improve your credit score. A high credit score helps you get better lending terms, including a lower interest rate, and proves to lenders you’re a responsible borrower.
To boost your score:
Lenders look closely at your credit history, so show them you can manage debt over time.
Your debt to income ratio (DTI) is one of the most important factors for mortgage approval. Most lenders want to see your monthly debt obligations at or below 43% of your gross monthly income.
Here’s how to calculate it
For example:
Total debt = $700 / $4,000 = 17.5% DTI
This person would likely qualify for a mortgage loan, depending on their other financial details. Find out more about How to Calculate your Debt-to-Income Ratio and What is a Good Debt-To-Income Ratio.
Saving for a down payment may seem like the hardest part of buying a home—especially if you’re still making student loan payments. But you don’t need 20% down to get started.
FHA loans, backed by the Federal Housing Administration, allow first-time homebuyers to purchase with as little as 3.5% down. This means if you want to buy a $250,000 home, you only need $8,750 for a down payment.
And many payment assistance programs are available through state agencies. For example, the Maryland Mortgage Program offers down payment and closing costs help for eligible buyers.
The key is to show lenders that you can:
If you can do that, even while paying rent and student loans, you’re showing lenders you’re ready.
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Depending on your situation, different loan types may help you qualify for a mortgage:
Talking to an experienced loan officer or mortgage lender can help you pick the best loan option for your goals. Learn more about Different Types of Mortgage Lenders.
Before you start house-hunting, get pre-approved for a loan. A mortgage application helps lenders assess your full financial situation, including your:
Pre-approval tells you how much house you can afford, and shows sellers that you’re a serious buyer. Plus, it helps guide your home buying budget so you don’t fall in love with homes outside your price range.
Many first-time home buyers find that once they’re pre-approved, homeownership feels a lot more real—and a lot more doable.
Buying a home means more than just saving for a down payment. You also need to plan for closing costs, which usually add up to 2% to 5% of the home’s purchase price. These are one-time fees paid at the end of the home loan process. They can include things like loan origination fees, home inspections, title insurance, and attorney fees.
If you’re also dealing with student loan debt, saving for these costs might feel like a stretch. But with smart planning, it’s manageable.
Start by creating a budget that includes both your down payment and estimated costs of closing. Look at your monthly income and all your monthly debt payments, like student loan payments, vehicle loans, and credit cards. This will help you understand what you can afford and how long you need to save.
Next, ask your mortgage lender about payment assistance programs. Many states offer help to first time homebuyers—sometimes covering some or all of your closing costs. These programs are often income-based and can be a big relief for buyers with student loans.
You can also negotiate with the seller. In some cases, sellers agree to cover part of the closing to help close the deal faster. Your real estate agent can help with these talks.
Finally, use your emergency fund carefully. Don’t wipe out your savings, but setting aside a portion for closing—even while making student loan payments—can help you become a homeowner without added stress.
With planning and support, you can manage both student debt and closing costs, and take the next step toward homeownership.
It’s easy to feel like you have to choose between making monthly student loan payments and saving for a home. But these goals don’t have to compete. In fact, paying your student loans while also making monthly mortgage payments can actually help build long-term wealth.
When you buy a home, each mortgage payment helps reduce your loan balance and increases your ownership stake in the home. This is called building equity. As the home’s value rises, your equity grows faster.
Compare that to renting, where every payment goes to someone else’s mortgage loan. Instead of helping yourself build wealth, you’re helping your landlord build theirs.
The sooner you become a homeowner—even with student debt—the sooner you can begin this wealth-building process.
If you’re concerned about qualifying for a mortgage due to your income or debt, using a co borrower might help. This person shares responsibility for the loan and also has their income and credit history considered during the mortgage application process.
This can help reduce your debt to income ratio, improve your loan terms, and potentially help you qualify for a higher loan amount. Common co borrowers include spouses, parents, or long-term partners.
However, keep in mind:
It’s a useful option, but make sure it’s a good fit for your financial situation and relationship.
Two major organizations help support mortgage lenders and make homeownership more accessible: Fannie Mae and Freddie Mac. These government-sponsored enterprises (GSEs) buy mortgage loans from lenders and guarantee them, making it easier for banks to lend money.
Fannie Mae, for example, introduced rules that allow mortgage lenders to consider your income driven repayment plan (IDR) or income based repayment plan (IBR) when calculating your debt to income ratio. That means if your student loan payments are small due to one of these plans, your DTI could remain within a lender’s guidelines.
For buyers with limited income or high student loan balances, these GSEs can make homeownership more realistic. Ask your housing counselor or financial advisor if your loan might qualify for Fannie Mae or Freddie Mac backing.
When applying for a mortgage loan, you’re protected by laws like the Home Equity Act, which promotes fairness and prevents discrimination in lending. Lenders must follow clear guidelines when evaluating your mortgage eligibility, and they can’t deny you a loan simply because you have student loans.
These rules help ensure that first time homebuyers, especially those with student debt, aren’t unfairly locked out of the market. If you think a lender is being unfair, you can reach out to housing counselors or file a complaint with the Consumer Financial Protection Bureau (CFPB).
Budgeting is one of the most powerful tools for reaching your homeownership goals—even with student debt. Your home buying budget should include:
To stay on track, consider using a mortgage calculator to run different scenarios. This will show how your monthly income, loan terms, and down payment affect your monthly payments.
Many online tools also let you add student loan payments to your debt estimates, helping you plan more accurately. You can try calculators offered by high-authority sites like NerdWallet or ConsumerFinance.gov.
You might wonder: should I wait until my student loan balance is paid off to buy a home?
Let’s look at the costs of waiting:
So while waiting might sound financially safer, it can mean more debt in the long run.
Of course, there are times when waiting is the smarter move. For example:
These are valid reasons to hold off. Just make sure it’s your personal financial situation—not fear of your student loans—driving your decision.
If you’re unsure where to start, talking to a HUD-approved housing counselor is a great first step.
Nonprofit counseling can help you:
These services are often free or low-cost and can make the process much easier to navigate.
You can find HUD-certified counseling through HUD.gov.
You didn’t borrow money for college just to delay the rest of your life. Earning a degree was meant to improve your future—and homeownership should be part of that future.
You can buy a home even while carrying student loan debt. It just takes planning, knowledge, and support.
Start by:
Don’t let anyone tell you that student loans and homeownership can’t go hand-in-hand. With smart moves and the right help, your dream of owning a home is within reach.
And don’t forget, you don’t have to go it alone. If you’ve got student loan debt that is making you doubt your ability to buy a home, get nonprofit homebuyer counseling so you’ll know exactly what you need to do become a successful homebuyer.
