Can I buy a home with student loan debt?

Buying a home can be an exciting purchase, but it can also be a scary one, especially for someone putting much of their efforts into paying off student debt.

According to the National Association of Realtors, the largest age group of home buyers was 35 years and younger in 2016, many of whom are first time home buyers. The median age of buyers in this category was 30 years old.

Someone who is 30 years old in 2016 with a four-year college degree likely graduated in 2008, when he or she was 22. The Institute for College Access & Success found that the average student graduating in 2008 had $23,200 in student loan debt.

In 2008, college students graduated with an average of $23,200 in debt.The typical college graduate in 2008 completed their degree with $23,200 in student loan debt.

Research from One Wisconsin Institute found that the typical debt-repayment period for someone with a bachelor’s degree is 19.7 years. This means that the 30-year-old who graduated at 22 still has another decade or more of repayment. According to the National Association of Realtors, 44 percent of home buyers age 34 and younger had student loans with a median amount of $25,000.

Don’t let loans stand in your way

This shouldn’t keep someone from pursuing their other life goals, such as homeownership. Owning a home is oftentimes a more financially sound option than renting. Plus, by 30, many people are ready to begin families or put down some roots in the area they want to live.

According to Bankrate, lenders like to generally see a debt-to-income ratio of 36 percent or lower. This number does not just take your debt into account; it also looks at your income. So, if you make a decent income, your student loan debt may not hold you back as much as you think. Seek a lender that will help evaluate your overall situation, and one that may be willing to work with people with higher DTIs.

“Lenders generally like to see a debt-to-income ratio of 36 percent or lower.”

If your income doesn’t quite balance out the amount of debt you have, there are other considerations as well. For instance, if you’re getting close to paying down your loans – say you have 10 or fewer payments left – the lender may consider this when evaluating your DTI.

The type of home you’re looking at may also make a difference. Condominiums generally come with Homeowners Association fees, which are included in the lender’s calculations. With these added fees included, you may not qualify for a low cost mortgage, but consider looking at a single-family home instead. These typically won’t come with HOA fees, therefore they may be easier for someone with debt to qualify for.

Buying a home with student loan debt can be difficult, but it’s still an attainable goal for grads who have dreams of owning their own homes soon.

For more information about how you can qualify for a mortgage, talk to the experts at Lenox/WesLend Financial or call 844-225-3669. As heard on the radio, it’s the biggest no-brainer in the history of mankind.