When you apply for a home loan, lenders put a lot of emphasis on your monthly debt-to-income ratio. This must be below 43% to qualify for most mortgages, although keeping it below 36% is ideal to make sure you can keep up with all your monthly bills-and to get the best terms on a loan.
You’re young, have a good job and want to buy a home. But you don’t think you can afford a home because you’re weighed down with student loans. You might be in luck. There are ways to afford.
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Student loans also add to your credit mix of installment and revolving loans, which can have a small beneficial impact on your credit score, according to FICO. When you pay off your student loans in full, it helps lower your DTI, but your credit score may dip slightly if you don’t have another installment loan in good standing on the books.
Your student loan debt doesn’t have to be the reason you count yourself out of buying a home. If you believe there’s some extra work needed on your end before you apply for a mortgage, start preparing for the process at least a year ahead of time.
If you’re saddled with student loan debt and want to buy a home, you have your work cut out for you. On average, it would take a college graduate with no student loan debt less than eight years to save enough for a 20 percent down payment on a $220,000 condo – the national median price.
Their parents own homes; they live in an affordable metro area, have college degrees and paid off their student loans before.
Talking about your student loans isn’t likely to be top of mind if you’re planning a wedding. But if you or your spouse-to-be have college debt. buying a house, and 12 percent even delayed marriage.
5 Tips for Buying a Home When You Have Student Loan Debt With $28,000 in student loan debt when he graduated from college last spring, Patrick O’Keefe took a step that not many students would take when looking to get out of debt: He signed up for a 30-year mortgage to buy a house.
One rule you’ll need to understand is the debt-to-income ratio, or DTI, which compares how much money you owe (on student loans, credit cards, car loans, and-hopefully soon-a home loan) to.