How Do Student Loans Affect Your Mortgage?

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Student loans can affect your mortgage loan. But it is not the only factor to be qualified for a home loan. It can be difficult to be qualified for a mortgage loan while having a student loan. But it is not impossible to buy a home when you have student loan debt. If you have a reliable income, you can still be able to buy a home. To qualify for a mortgage, you don’t need to be 100% debt-free. Lenders mainly check the debt-to-income (DTI) ratio while considering you for a loan. So, you have to maintain a good credit score along with a lower Debt-to-income (DTI) ratio to be qualified for a home loan.

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As long you have a solid reliable income and can be able to make payments without facing trouble on your monthly budget, there is no problem buying a home while having student loans. So, it is worth buying a home even with a student loan debt. Particularly if you have a solid reliable income and a good credit score, you can easily purchase a home.

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As a home buyer, you will face trouble getting a mortgage when you have a high DTI ratio. Conversely, a lower DTI ratio will help you to get a mortgage loan comparatively easily. If your DTI is more than 50%, it is wise to pay down the loans before you buy a home. Because it is the fastest way to lower your DTI ratio. Furthermore, you have to focus on the ways to increase your income to reduce your DTI ratio. Similarly, credit card bill payments are also important to maintain a good credit score. You have to emphasize your credit card debt before your student loan debt.

Credit: forbes

Financial institutions mainly consider the credit score while deciding whether to lend you money or not. So, paying your bill on regular basis and managing your credit utilization is very important to build a solid financial reputation. If you are in a position to choose between credit card debt and student loan debt, you need to prioritize credit card payment over student loan debt.