Over 40 million people have student loan debt. If you are one of them, you could be worried that it will have an impact on your ability to buy a home. Fortunately for you and other borrowers, having a student loan does not necessarily mean that you will not qualify for a home loan. To help you get started on the road to homeownership, here are some ways you can secure a home loan while still paying off a student loan debt.
Minimize Your Other Debts
When lenders review your home loan application, they look at several aspects of your financial information. One of those is the debt-to-income ratio that you currently have. The figure is used to determine how much you can afford to pay towards debts each month and how much your current debts are.
If your ratio does not leave wiggle room to fit in a home loan, there is a good chance that you could be denied a loan. If paying off your student loan is not a possibility, focus on your other debts. For instance, paying your credit cards and car loans could have a significant impact on your eligibility for a loan.
Raise More Money for Your Down Payment
Another way you can make yourself more appealing to lenders is to increase your down payment. A larger down payment will reduce the amount that you have to borrow and make it more challenging for lenders to say no to your application.
If you have not started saving for your down payment, now is the time to do it. If you want to raise funds quickly, there are a few things you can do. For instance, you can get rid of your cable and subscribe to a streaming service. You can also skip out on eating at restaurants and pack your lunch for work. Work with a financial planner to find other ways you can raise more money.
Talk to Your Student Loan Provider
Before you apply for the home loan, contact your loan provider. This is especially important if you have not been making payments on the debt. Mortgage loan lenders will not regard this favorably.
When you talk to the student loan provider, you can ask for a grace period or negotiate a repayment plan to help you meet the requirements of the loan. The sooner you get back in the good graces of the provider, the sooner you can start to look for a home to buy.
Ask your real estate agent about other ways you can improve your chances of getting a home loan.