Graduates often enter the workforce already tens of thousands of dollars in debt thanks to student loans, and those who went on for advanced degrees may find themselves facing debt in the six digits. Unfortunately, these young professionals are also often preparing to start a family, with many getting married and even planning children before they turn 30. A part of this usually involves buying a home, but this is where student loan debt can become even more of a burden. It often pushes these graduates’ debt-to-income ratio over 43 percent, making many lenders unwilling to work with them.
For conventional loans and mortgages made through the U.S. Department of Veterans Affairs, student loans will always be included in factoring an applicant’s debt, even if those loans are in deferment. However, the Federal Housing Administration will not count student loans as part of debt if they have been in deferment for a minimum of 12 months.
For those who are not able to qualify for a mortgage owing to their student loan debt, there are several different methods of reducing their debt. The first is to ask if the lender will not factor in debt that will be paid off soon, usually within 10 payments. This does not include credit card debt, but paying down those debts can also help.
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