Americans are drowning in more than $1.5 trillion of student loan debt. PHEW! That’s not overwhelming or anything. And you might be wondering: Can I get approved for a mortgage with all my student debt? And the answer is… dependent on a few factors.
Real talk: Sure, student loan debt CAN prevent you from getting approved for a mortgage, IF you’re spending half your monthly income on it. Everyone’s situation is totally different and it really requires a one-on-one chat with a Loan Officer. But for now, let’s go over the basics.
Lenders want to see that you’ve had steady employment for at least 2 years. But if you’re fresh out of school with no real work experience yet, don’t worry. If you graduate, find a job, and can show proof that you do and will have steady income into the future, you can supplement that 2-year period with your college transcripts.
If your monthly student loan payments are crushing you, you could look into a student loan refinancing or consolidation program to lower your interest rate and get yourself on a solid repayment plan to get that balance down to put yourself in a better position to buy a home.
Find ways to earn some extra cash. Remember, there is no prepayment penalty on student debt, so make all the extra payments you can.
And there are a ton of low and no downpayment mortgage options. You should still save for a downpayment because the more you put down, the smaller your monthly payments will be and the more equity you’ll already have in your home. But don’t stress too much about it.
Bottom line: If student loans are your only debt, you make decent money, and you’re looking to buy a home well within your means, you should be just fine. If you’re unsure about where you stand, give us a call! This is what we do. We’ll crunch the numbers and tell you exactly what you need to do to buy that house!