Owning a home is part of the American dream. And yet, many people have to set that dream aside.
In the 1980s, first-time home buyers were usually in their late 20s. In 2025, the median age of first-time buyers hit an all-time high of 40 and student loans are one of the top three reasons why buyers delay their first purchase.
That said, having student debt doesn’t automatically disqualify you from getting a mortgage. So, can you get a home loan with student loans? Yes. That’s because lenders pay attention to your credit profile and debt-to-income ratio — not how much you owe, period.
So, Can You Buy a House with Student Loans at All?
The short answer is yes, you can buy a house even if you have student loans. Lenders want to know whether you’d be able to pay off the mortgage alongside your other financial obligations. They draw conclusions based on your income and credit history alongside monthly payments.
So, if you think that having student debt will automatically put your mortgage application into the rejected pile, that’s just not how it works. That’s right: you don’t have to put homeownership till your student debt is all paid off!
How Student Loans Affect Your Mortgage Approval
While student debt isn’t a disqualifier in and of itself, it still influences the lender’s decision in these three ways.
Debt-to-Income Ratio (DTI)
This is how lenders evaluate whether you can manage paying off both the student loans and the mortgage. They use the DTI ratio, which basically shows how much of your income goes to servicing existing debt. The higher the share, the tougher it may be to get a mortgage loan.
Credit Score
Like any other kind of debt, student debt shows up on your credit history, and it can improve or lower your credit score. Miss a payment or make it late, and it’ll show up on your credit report for the next 7 years.
Down Payment
It’s hardly news that when you have to pay off rent, bills, and student loans every month, saving up for the down payment can be tough. But the more you can set aside for it, the less you have to borrow, and that can boost your chances or even qualify you for better rates.
What Is Debt-to-Income Ratio?
There’s really nothing mysterious or complicated about the debt-to-income ratio. You need to know your income, monthly loan payments and how to divide the two.
Let’s say you earn $4,500 a month before taxes and withholdings, and you’re paying off several loans. Here’s how to figure debt-to-income ratio:
What’s the sweet spot for the DTI ratio? Well, it really depends. Even though U.S. News reports that a strong DTI ratio sits below 36% to 43%, depending on the lender, the same article also says you can get a mortgage loan even with a 50% DTI if you have other things going for you.
Do Student Loans Affect Your Credit Score?
Absolutely. The question isn’t so much “Do they affect your credit score?” as it is “How do student loans affect your credit score?”
If you miss a payment, that’s not going to do your score any good. After all, your payment history determines 35% of your total credit score. In fact, a single missed payment can cost you a hundred points.
That said, student loans can also improve your credit score. Timely payments help you build a good payment history. They also contribute to the diversity and length of your credit history, which account for 10% and 15% of your score, respectively.
Important: Check your credit report before submitting a mortgage application. You are entitled to one free copy annually.
Are Student Loans Deferred? Here’s What It Means for Mortgage Applications
You can ask your student loan payments to be temporarily suspended for a variety of reasons. For example, federal loans allow deferment due to unemployment, economic hardship, cancer treatment, and more.
Even if you’re not paying off your student loans at the moment, that doesn’t necessarily mean lenders will add $0 to your DTI ratio. Depending on the lender, they may use 1% or 0.5% of the outstanding loan balance instead. In rare cases, lenders may ignore the debt or calculate a fully amortized payment based on loan terms.
For example, Freddie Mac will add 0.5% of the remaining balance if your student loan is deferred. If you’re on an income-based repayment plan, Freddie Mac will either take the actual payment amount or, if it’s $0, use 0.5% of the outstanding balance.
Should You Shelve Homeownership Until You’ve Paid Off Student Loans?
We can’t in good conscience tell you “definitely yes” or “definitely no” here. In some cases, paying off student loans is actually the right move. In others, you can move forward with your mortgage application even if you’re still making that monthly payment.
Consider paying off student loans first if:
- Your monthly payments are high.
- Your income isn’t high enough for a mortgage.
- Your savings are limited.
- Your financial situation is unpredictable.
Consider applying for a mortgage before student debt is taken care of if:
- You have a stable source of income.
- You manage your current debt well.
- You have a good credit history.
- You have enough savings for the down payment.
A Word on Saving Up for a Down Payment
How much should you set aside for a down payment? Well, that depends on the lender. Down payments can be as low as 3% of the total price and as high as 20%. There’s usually a minimum down payment, so check in with different lenders.
Remember that you’ll also need to pay closing costs, which are fees associated with the purchase. They’re usually between 2% and 5% of the price, entirely separate from your down payment.
Ready to start saving up for a down payment? Here are a few actionable steps to help you out:
- Calculate exactly how much you can save each month and build a realistic budget around that number.
- Open a separate savings account and schedule automatic monthly transfers.
- Consider cutting non-essential expenses or reducing your cost of living by downsizing or making lifestyle changes.
- Research first-time homebuyer programs that offer flexible loans with low or zero down payment requirements.
- Keep an emergency fund for unforeseen expenses, apart from your mortgage fund.
7 Tips for Buying a House with Student Loans
Needless to say, buying a house isn’t something you should take lightly. There’s a lot of preparation you should take on before you get that sweet approval letter:
- Get a copy of your credit report from all three agencies (Experian, Equifax, TransUnion).
- Determine how much you would need to borrow to buy a house.
- Calculate your current debt-to-income ratio and estimate your future one if you get a mortgage.
- Compare lenders based on the upfront costs, rates, down payment requirements, etc.
- Determine how much you’ll need to save for the down payment and closing costs.
- Avoid taking on other kinds of debt before getting the mortgage approved.
- Apply for mortgage pre-approval.
Final Thoughts
Buying a house with student loans is by no means impossible. With a good DTI ratio and credit history, you can get a mortgage, especially if you shop around for affordable loans and save up for the down payment.
So, don’t give up on the American dream just because you’re still paying off student loans. That said, take a long, hard look at your finances: you don’t want to make the debt burden unbearable for yourself, either.
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