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Can I Buy a Home with Student Loans?

Angie Larson

Angie joined the BHURDinUtah team in 2016. She received a degree in English from Brigham-Young University-Idaho in 2011. As a content writer, Angie en.

Angie joined the BHURDinUtah team in 2016. She received a degree in English from Brigham-Young University-Idaho in 2011. As a content writer, Angie en.

Sep 5 4 minutes read

If you have student loans, you’re not alone. The reality is college is expensive, and many people need financing, or student loans, in order to complete their educational goals. After achieving a college degree, many people are eager to move onto their next big step, purchasing their first home. But, with student loan debt, is it even possible to buy a house? We’re happy to tell you, yes, it is. 

Student loan debt can make obtaining a mortgage little more challenging, but it doesn’t make it impossible. Your student loan debt shouldn’t discourage you from finding out more about your homeownership options. It is possible to obtain a mortgage despite having student loans.  

Here’s some advice on how to make it happen.

Know and Boost Your Credit Score 

Your credit score is based off a number of factors, like your payment history, amounts owed, length of credit history, types of credit used, etc. Lenders look at your credit score because it tells the lender the probability that you, if extended a loan, will be able to pay it off. A person with a high credit score is more likely to pay off debts, where a person with a low credit score is less likely. 

The first step in boosting your credit score is to make all your loan payments on time. Late payments on any debt will damage your credit score and can ultimately stop you from qualifying for a home loan. On the other hand, on-time payments can actually add to a positive credit report and make you more appealing to a lender. 

Minimize Your Debt-to-Income Ratio

Another thing mortgage loan officers will consider is your debt-to-income ratio, or the percentage of your monthly income spent on debts like credit cards, student loans or auto loans. A high debt-to-income ratio makes you a less appealing prospect to a lender. If your ratio is too high, you will either have to reduce your debt or increase your income.

So, start a personal finance plan that includes paying off all high interest debt as quickly as possible. 

Get to know your Mortgage Options

There are loan options, like the FHA, that offer programs to help potential homebuyers with student loans. Your best option to learn more about these programs is to meet with a lender. Because when it comes right down to it, everyone’s situation is different. A lender is going to look at your unique situation and be able to tell you what options you have available. 

We’d love to get you in touch with the awesome lenders we know and trust. They’ll be able to tell you, probably in about 20-30 minutes, where you stand. 

Down Payment Assistance Programs

Believe it or not, there are cities here in Utah that offer down payment assistance programs that offer homeowners a grant for their down payment. That’s why it’s so important to work with an experienced, trusted real estate consultant who is knowledgeable about the area and provide you with the best advice for your situation. 

Bring in a Co-Signer

It’s not always possible, but some buyers are able to bring in a co-signer on their loan. A co-signer can help home buyer obtain better mortgage terms than they could have without one. So, while you still might have been able to get some type of mortgage on their own, having a co-signer allows you to get a loan with a lower interest rate, a smaller down payment, or a higher loan amount.

If you’re looking to buy a home, but still worry that you have student loans, we’d love for you to give one of the BHURDinUtah agents a call. We’ve worked with many first time buyers and are happy to share our experience or get you in contact with one of our trusted lending partners. Let us help you make your home ownership dreams come true.

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