Most
Americans
still
view

homeownership
as
a
key
to
building
wealth,
but
for
many,
that
piece
of
the
American
dream
is
on
hold
or
out
of
reach
thanks
to
the
heavy
burden
of

student
debt. 

In
fact,
according
to
a
recent
study,

millennials
currently
struggle
with
so
much
debt
that
25%
worry
they
won’t
qualify
for
a

mortgage.
Nearly
1
in
5
millennials
(19%)
think
their
credit
card
debt
will
be
a
stumbling
block
when
applying
for
a
mortgage,
while
1
in
7
(14%)
think
the
same
about
their
student
loans. 

If
you’re
considering

buying
a
home
but
worry
that
student
debt
will
prevent
you
from
securing
a
mortgage,
you’ll
need
to
be
strategic
about
your
approach
to
increase
the
probability
of
your
application
getting
approved. 

How
student
loans
impact
your
ability
to
buy
a
home

Adding
a
mortgage
on
top
of
monthly
student
loan
payments
can
create
a
significant
financial
strain.
The
more
debt
you
carry,
the
fewer
resources
you
have
to
allocate
toward
a
down
payment
or
for
monthly
mortgage
payments,
making
some
lenders
less
likely
to
approve
your
application.
Student
loan
debt
may
affect
your
home-buying
goals
in
a
few
key
ways.

Debt-to-income
ratio
(DTI)

Lenders
calculate
your
DTI
ratio
by
dividing
your
total
monthly
debt
payments
(including
student
loans)
by
your
gross
monthly
income
to
assess
your
ability
to
handle
additional
debt,
like
a
mortgage.
Having
a
high
debt-to-income
ratio
can
limit
the
loan
amount
you
qualify
for,
or
even
disqualify
you
from
certain
mortgages.
DTI
standards
vary
among
lenders,
but
most
look
for
a
DTI
below
35%,
while
others
accept
up
to
45%,
and
still
others,
like
an
FHA-backed
loan,
will
allow
50%. 

Credit
score

Your
credit
score
reflects
your
approach
to
handling
credit
and
gives
lenders
insight
into
how
likely
you
are
to
make
timely
payments.
A
higher
credit
score
is
generally
associated
with
high
reliability,
improving
your
chances
of
a
mortgage
approval.
A
lower
credit
score
due
to
late
payments
or
defaults
may
pose
more
challenges
to
getting
approved.

Ability
to
save
for
a
down
payment

Having
a
larger
down
payment
will
reduce
the
amount
you
need
to
borrow
and
can
strengthen
your
mortgage
application.
Student
loans,
however,
can
make
it
harder
to
reach
that
down
payment
goal.
Showing
lenders
you
have
a
stable
income
large
enough
to
handle
both
mortgage
and
student
loan
payments
is
a
plus. 

Strategies
for
securing
a
mortgage
with
student
loan
debt

Student
loan
debt
is
just
one
factor
lenders
use
to
determine
if
you
qualify
for
a
loan.
To
improve
your
chances
of
getting
approved,
consider
the
following
strategies. 

Pay
down
your
debt

Work
to
reduce
your
overall
debt
and
improve
your
debt-to-income
ratio
by
paying
down
high-interest
debts
first
(like
credit
cards),
and
explore
options
for
refinancing
or
consolidating
student
loans
and
other
debt
to
make
monthly
payments
more
manageable.
In
addition,
you
might
also
explore
strategies
like
using
a
“debt
avalanche”
to
pay
off
high-interest
loans
quickly.

Improve
your
credit
score

Boost
your
overall
credit
score
to
improve
your
chances
of
getting
more
favorable
mortgage
terms.
It’s
important
to
make
consistent,
on-time
payments
on
all
your
debts,
including
student
loans
and
credit
cards,
as
even
one
late
payment
may
be
reflected
in
your
credit
report. 

Review
your
credit
report
at
least
annually
to
check
for
discrepancies
and
address
any
errors
promptly.
If
you’re
struggling
to
bring
your
credit
score
up,
consider
credit
counseling
as
an
option
for
in-depth
advice. 

Switch
to
an
income-driven
repayment
plan

You
might
qualify
for
one
of
the
federal
government’s
four
income-driven
repayment
plans
(IDRs)
based
on
your
current
circumstances.
IDRs
are
intended
to
make
student
loan
debt
more
manageable
by
calculating
a
monthly
payment
based
on
your
current
income
and
family
size,
rather
than
the
amount
of
your
debt. 

While
an
IDR
can
significantly
reduce
your
monthly
student
loan
payment,
thereby
freeing
up
more
money
for
a
mortgage
payment,
there
are
some
potential
downsides,
including
the
fact
that
you’ll
pay
more
interest
on
your
student
loan
over
the
long
haul.
Weigh
your
options
carefully,
and
seek
professional
advice
if
necessary
before
applying
for
an
IDR. 

Shop
around

Do
your
homework
and
compare
the
competition.
Choose
a
reputable
lender
who
has
experience
working
with
clients
who
carry
student
loan
debt,
as
they’ll
be
able
to
help
structure
the
best
financing
options
to
suit
your
specific
needs.
Consider
getting
pre-approved
if
possible,
as
this
not
only
gives
you
a
realistic
idea
of
how
much
you’ll
be
able
to
borrow,
but
it
also
signals
to
home
sellers
that
you’re
serious
rather
than
casually
looking. 

Add
a
co-signer 

If
you
have
a
responsible
family
member,
or
trusted
friend,
on
solid
financial
footing
with
little
debt
and
a
high
credit
score
willing
to
co-sign
your
mortgage
application,
you
could
improve
your
chances
of
getting
approved.
For
this
kind
of
agreement
to
work,
it’s
advisable
to
work
with
an
attorney
so
terms
and
conditions
are
clear
within
a
written
contract
that
includes
repayment
schedules
and
title
agreements.    

Consider
home
loan
programs

There
are
a
number
of
home
loan
programs
you
may
qualify
for,
even
if
you
carry
student
loan
debt. 

Fannie
Mae
and
Freddie
Mac
both
have
a
number
of
loans
that
cater
to
lower-income
borrowers
or
first-time
home
buyers
and
may
accommodate
low
down
payments
and
cancellable
mortgage
insurance,
among
other
features. 

Other
government-backed
loan
programs
include
FHA
loans
which
typically
require
only
a
3.5%
down
payment,
as
well
as
VA
loans
for
active-duty
service
members,
surviving
spouses,
and
veterans,
which
do
not
require
a
down
payment
or
mortgage
insurance.
USDA
loans
may
be
available
if
you
live
in
a
designated
rural
area. 

Work
with
a
lender
who
is
knowledgeable
about
your
particular
situation
and
can
recommend
a
loan
program
to
meet
your
needs. 

Buying
a
home
with
student
debt
can
be
challenging,
but
it’s
not
impossible.
Work
closely
with
both
a
real
estate
professional
and
a
reputable
lender
to
create
a
strategy
that
will
meet
you
where
you
are,
and
open
the
door
to
your
new
home
sooner.

This
column
does
not
necessarily
reflect
the
opinion
of
HousingWire’s
editorial
department
and
its
owners.

To
contact
the
editor
responsible
for
this
piece:



[email protected]

Related