Graduates Face Mortgage Qualification Difficulties Thanks To Student Loans

High student loans can affect mortgage-seeker’s debt-to-income ratio

Graduates Face Mortgage Qualification Difficulties Thanks To Student Loans
April 1, 2016

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.

If you are interested in a personal loan, visit our curated list of top lenders.

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trish | 04.04.16 @ 16:39
I pray my children do not face this issue. Student loans seem to be a necessary evil
Brittany | 04.04.16 @ 16:39
I'm a full time student, so this is something that I honestly fear since I am in the process of buying a home
Elaine | 04.04.16 @ 16:40
Ugh this is one of my fears. High student loans messing up the future.
Carla | 04.04.16 @ 16:42
Its sad that wanting to educate yourself for a better life has to create an obstacle such as not qualifying for a mortgage.
STOKES | 04.04.16 @ 16:43
That's incredibly disappointing. I hope my kids don't have to worry about this. Makes me glad I don't have student loans.
Kailie | 04.04.16 @ 16:44
This doesnt surprise me at all... but as a student, this is scary
Erin | 04.04.16 @ 16:45
We had loans at the time we purchased our home, but it didn't hit us that hard, fortunately. Although I know they will have student loans, I hope my children will not have so much it becomes a detriment to them being able to purchase a home.
Kyle | 04.04.16 @ 16:46
This is actually really terrifying but at the same time, I kinda suspected such. Student loans are horrible
Kaila tubbs | 04.04.16 @ 16:46
This is not a surprise to me as a full time college student, many of us can barely afford cost of living, even working full time, and going to school full time. cost of tuition is ridiculous.
Tina | 04.04.16 @ 16:46
Student loans are awful. Thankfully I learned that before going to school. I took every scholarship I could, worked multiple jobs and saved money as a teen to help pay for it. I'm reaping the benefits now, having no loans to repay.
Steffanie | 04.04.16 @ 16:47
My kids have been looking for other ways to get a college education without the huge debt. Hopefully it works,especially after reading this!
Jonathan | 04.04.16 @ 16:47
Just another way the system screws millennials.
$commenter.renderDisplayableName() | 12.01.20 @ 00:13