Qualifying for a Mortgage When You Have Student Debt
March 25, 2020

Qualifying for a Mortgage When You Have Student Loan Debt

Getting a stable job and buying a home is the epitome of the American dream. Unfortunately, it’s a dream that many people today feel like they’re unable to realize because of student loan debt. In fact, many people who want to purchase a home don’t even attempt to apply for a mortgage because they don’t think they’ll be able to qualify.

Although student loan debt can be a barrier to buying a home, there are multiple ways for borrowers to obtain a home mortgage. Here, we’ll explore three of the first and most important steps you need to take if you want to buy a house while still paying off your student loans.

Get Comfortable With Your Finances

If you’re managing monthly student loan payments in addition to your other bills, the first thing you need to do before you buy a home is to get comfortable with your finances. One of the biggest barriers for student loan borrowers is their debt-to-income ratio. Most people are able to find some money to begin paying off debts if they take the time to sit down and create a budget. If you’re able to, start paying off small debts one-by-one. This will create room in your finances and reduce the high debt-to-income ratio that’s preventing you from getting a home loan.

Ask About All of Your Loan Options

A traditional mortgage is not the only option for people who want to buy a home today. The government runs multiple first-time homebuyer programs and some banks offer alternative loan options for unique financial situations. Many individuals with high student loan debt have found that non-qualifying mortgage loans are a viable option. Non-qualifying mortgage loans help individuals with non-traditional income qualify for a loan. Although these loans sometimes require extra paperwork, it’s worth the money saved in rent payments while you continue to pay off your student loans.

Find a Cosigner Who is Willing to Help

One of the most common ways to qualify for a mortgage while you have student loan debt is to find a cosigner willing to help. A cosigner is a person who takes on dual-responsibility for your home loan and agrees to make the payments if you fail to do so. Many student loan borrowers will find a relative who is able to cosign a mortgage with them and then refinance their mortgage in the future to relieve that relative of their responsibilities.

Before you ask a cosigner to sign your loan, it’s imperative to understand that their financial health can be damaged if you fail to make your loan payments. Therefore, it’s still important to make sure you’re able to handle the payment and that your cosigner is a person you can communicate openly with about your finances.

Settle Your Debts With the Help of McCarthy Law PLC

If you’re experiencing student loan debt but are ready to move on with your life, the lawyers at McCarthy Law PLC are here to fight for you. Our office is experienced in student loan debt consolidation and student loan debt settlement. When you’re ready to buy a home, you can consult us to better understand your financial situations and all of the options available to you.

We are committed to helping our clients achieve the financial freedom they deserve. When you work with us you can be debt-free in the near future. To schedule a free consultation, call our office at 855-976-5777 or contact us online today.

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