Can you get a mortgage with student loans?

Student debt doesn’t have to kill your dreams of homeownership

Author pictureAuthor picture
Author picture
Written by
Author picture
Edited by
Graduation Cap on a Pile of Money

When it comes to personal debt, student loans are often a big part of the conversation. Student loan debt has reached a staggering $1.757 trillion, or an average of $37,338 per borrower in federal student loans, according to recent figures from With such substantial debt, it’s natural for potential homeowners to wonder if obtaining a mortgage while paying off student loans is even possible.

The good news is that you don’t have to put your dreams of homeownership on hold; there are ways to qualify for a mortgage while repaying student loans.

Key insights

  • Obtaining a mortgage while balancing student loan debt takes careful planning and consideration.
  • Student loan forgiveness, forbearance or deferral may impact mortgage options.
  • Reducing other personal debt, such as auto loan or credit card balances, may increase your chances of mortgage approval while you carry student loans.

What mortgage lenders look for

Before even applying for a mortgage, you’ll want to understand what mortgage lenders are looking for — especially if you’re carrying student loan debt. Each lender has its own specific requirements, but most of the requirements fall within the “Four C’s”: capacity, capital, collateral and credit.

Capacity refers to your ability to pay back the loan based on your income and how much debt you owe. Not only do you have to show how much income you bring in, but lenders also evaluate your recurring debt obligations and other liabilities.

Your debt-to-income ratio (DTI) is the sum of your monthly debts divided by your gross monthly income. Lenders look at this number as a percentage and use it to gauge your risk as a borrower. Your DTI includes car payments, credit cards, personal loans, alimony or child support payments and student loan payments, too.

Lenders want to ensure you can make your mortgage payment, even if you have other debts. If your DTI is too high — typically higher than 36% — then it makes approval more difficult, and you may want to shift your focus to paying down debt.

Capital refers to any financial reserves you have, such as savings, investments, retirement accounts or other sources that can easily be converted to cash if needed. This also includes gifts and grants for a down payment, such as from a family member or government assistance program.
When you take out a mortgage, your purchased home is the collateral. If you default on your payments, the lender can take possession of your home.
Your credit score is another major determinant of mortgage approval, and it impacts the interest rate you’re approved for as well. Your credit report includes the payment history of your student loans, which can have a positive or negative impact on your score. Making on-time student loan payments and reducing your debt is the best way to keep your credit score strong and increase your odds of approval.

Student loan forgiveness, deferral or forbearance

Another aspect to consider is whether your federal student loans are eligible for forgiveness, deferral or forbearance. These are all scenarios impacting DTI, which may ultimately influence mortgage approval chances.

  • Although President Joe Biden’s federal student loan forgiveness program is on hold due to court proceedings, it is possible the program will go into effect. If this happens, borrowers may be eligible for up to $20,000 in student loan forgiveness.
  • Deferment is when you temporarily stop making payments to your loans, which means you’re not chipping away at your balance. A larger balance will increase your DTI and may negatively impact your odds of mortgage approval.
  • Loan forbearance is similar, but it’s limited to a 12-month period, and you can either stop making payments or reduce your payment. It doesn’t reduce your balance.

» MORE: How to get student loan forgiveness

How to get a mortgage with student loans

Getting a mortgage with student loans is doable, and there are numerous ways to improve your odds of success.

Reduce your debt

Considerably reducing or eliminating your debt before applying for a mortgage may improve your chances of approval. Paying off auto loans, personal loans or credit cards will improve your DTI. The lower your DTI, the better your chances of qualifying.


  • Reduces your monthly debt obligations
  • Could increase your credit score
  • Streamlines your budget


  • Payoff may take several months or longer
  • Limits disposable income

Consider a government-backed mortgage

Some government-backed mortgages, such as a loan from the Federal Housing Administration (FHA), have low down payment requirements, low credit score requirements and might accept borrowers with a high DTI.


  • They’re easier to qualify for with student loans
  • They offer competitive interest rates
  • They’re accessible to people of many credit backgrounds


  • You may have to pay for mortgage insurance no matter what down payment you make
  • There are maximum loan amounts
  • The overall loan cost may be more expensive than a conventional loan

Look for government assistance programs

In addition to government-backed loans, such as FHA loans or VA loans, there may be government assistance programs available to you. If you’re eligible, these programs can help you qualify, finance or make a down payment for a mortgage.

Each state has its own program, but you may find other options for special groups too.


  • Your down payment may be more affordable
  • You could get a low interest rate
  • Repayment may not be required


  • There might be strict eligibility requirements
  • A program could have residency restrictions
  • Participation can lengthen your closing timeline

Use a co-signer or co-borrower

If it’s too challenging to get approval on your own, some lenders allow you to use a co-signer or co-borrower. This is someone who is responsible for the payment if you default on the loan. If the co-signer is a more qualified borrower, then it may increase your odds of approval.

Alternatively, “you could opt for getting a loan from a friend or relative. This way, you can negotiate a term that guarantees that your monthly payments fit into your budget,” advised Rinal Patel, co-founder of We Buy Philly Home, a real estate investment company based in West Point, Pennsylvania.


  • Using a co-signer or co-borrower may increase your odds of approval
  • You may qualify for more favorable rates and loan terms
  • On-time payments can improve both applicants’ credit scores


  • Lenders may limit who can act as a co-borrower
  • The creditworthiness of both borrowers is impacted by the mortgage
  • It could strain a relationship if agreements aren’t kept

Refinance your student loan

Refinancing student loans may lower your monthly payments to a more manageable amount. For a private student loan, a refinance can possibly lower your interest rate or lengthen your repayment term, both of which will reduce your monthly payment.

You can also refinance federal student loans, but only via a private lender and not the federal government. By doing this, you may lose valuable federal loan benefits, including potential loan forgiveness or deferment options.


  • Refinancing can reduce your monthly student loan payment
  • Refinancing a variable-rate loan into a fixed-rate loan can protect against rising interest rates


  • You’ll lose federal loan benefits
  • Refinancing may come with costly fees

Earn more income

Reducing your debt isn’t the only way to improve your DTI; increasing your income will also help the ratio. Taking on a side hustle, asking for a raise in your current job or taking on more hours at work are all examples of increasing income.


  • More income improves your DTI
  • You can use the additional income to pay off debt


  • Earning extra income may limit your free time
  • A side hustle may negatively impact your performance in your main job

Should you pay off your student loan before buying a house?

There are several considerations to take into account before deciding whether or not you should pay off your student loans before purchasing a home. Bear in mind that there is no right or wrong answer, and you should base your decision on your personal financial situation.

Ask yourself:

  • Is my DTI too high? Calculate your combined monthly debt obligations and compare those with your income. Can a mortgage payment comfortably fit into your current financial scenario? If you have too many existing debt obligations, you may want to focus on debt payoff for the time being.
  • Can I save enough for a down payment? If you’re able to afford to save for a down payment (typically from 10% to 20% of a home’s purchase price) and make your student loan payments, then buying a home may be possible.
  • Can I afford other home costs? Maintenance and home repairs are a given as a homeowner. Be sure to factor unexpected costs into your finances.
  • Will I live in the same place for five to 10 years? It usually takes years for a home’s value to increase to the point where you can sell it for more than you’ve invested in it. If you can’t commit to staying in one place, perhaps renting and focusing on debt payoff is a preferable strategy.
  • How high is my student loan interest rate? If the interest rate tied to your student loan is low, then it may make sense to deprioritize paying the loan off until a later date.
  • What savings will I have left after I pay off my student loans? Examine if you’ll have enough money set aside to maintain an emergency fund and make a down payment after you allocate a lot of savings toward paying off student loans.

» MORE: Renting vs. buying a house


How much debt is too much to qualify for a mortgage?

Each lender has its own lending requirements, but a lender typically looks for a DTI of 36% or lower. This means that roughly 36% or less of your gross income is devoted to monthly debt payments.

Will my debt affect the interest rate on my mortgage?

Yes, debt can indirectly affect your mortgage’s interest rate. Generally speaking, borrowers with high credit scores qualify for the lowest interest rates. If you consistently use a large amount of your available revolving credit — i.e., you maintain high credit utilization — your credit score will suffer. Additionally, late or missed debt payments will also hurt your score.

What’s the average price of a house in the U.S.?

The median price of a house in the U.S. in the first quarter of 2023 was $436,800, according to the Federal Reserve Bank of St. Louis. This was an increase from $433,100 in the first quarter of 2022.

Bottom line

It is possible to obtain a mortgage with student loans, but it may take work. The first step is to evaluate your monthly expenses — especially debt obligations — and create a plan to reduce or eliminate as much debt as possible. Not only does a lower DTI make you more attractive to lenders, but it also frees up your budget to concentrate on a mortgage payment, a student loan payoff or both.

Before heading down the path of homeownership, consider your entire financial picture, including whether you have a healthy amount of savings, if you’re comfortable with all the costs of homeownership (including the unexpected costs) and if you plan to stay in a home for the foreseeable future.

With careful planning, the dream of homeownership can soon become a reality, including for those with student loans.

Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
  1., “ Student Loan Debt Statistics .” Accessed May 24, 2023.
  2. Freddie Mac, “ The 4 Cs of Qualifying for a Mortgage .” Accessed May 24, 2024.
  3. Consumer Financial Protection Bureau, “ What is a debt-to-income ratio? ” Accessed May 24, 2023.
  4. Federal Student Aid, “ What are loan deferment and forbearance? ” Accessed May 24, 2023.
  5. Consumer Financial Protection Bureau, “ FHA loans .” Accessed May 24, 2023.
  6., “ Government-backed home loans and mortgage assistance .” Accessed May 24, 2023.
  7. Federal Deposit Insurance Corporation, “ Loans and Mortgages .” Accessed May 24, 2023.
  8. Consumer Financial Protection Bureau, “ Seven factors that determine your mortgage interest rate .” Accessed May 24, 2023.
  9. Federal Reserve Bank of St. Louis, “ Median Sales Price of Houses Sold for the United States .” Accessed May 24, 2023.
Did you find this article helpful? |
Share this article