Published in: Student Loans | Aug. 23, 2019

Will Student Loans Prevent Me From Getting a Mortgage?

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It is possible to get a home loan when you have student debt -- but it may not be so easy.


Key ring and calculator on top of paperwork for a mortgage application.

Image source: Getty Images

An estimated 45 million Americans owe money in the form of student loans, and if you're one of them, you're no doubt aware that those monthly payments can be a real drag. In fact, having that debt hanging over your head might prompt you to delay certain life milestones, like getting married, having kids, or buying a home.

But what if you're ready to move forward with the latter despite having a large chunk of leftover student debt to contend with? Will that debt prevent you from getting a mortgage?

Can you qualify for a mortgage if you have student debt?

The good news is that student debt won't necessarily prevent you from getting a mortgage. But depending on your circumstances, it may result in a scenario where you have a harder time qualifying for one.

For a mortgage company to be comfortable lending you a large sum of money for a home, it wants reassurance that you're capable of paying it back. To that end, it will look at things like your credit score, and also your debt-to-income ratio. Your debt-to-income ratio compares your total outstanding debt to the amount of money you earn, and the lower it is, the greater your chances of getting approved for a mortgage. 

Now, if you have a modest amount of student debt and don't owe money elsewhere (say, your car is paid off and you're not carrying credit card debt), then you may end up qualifying for a mortgage easily. But if you're carrying a whopping pile of student loans, and also owe money on your vehicle and credit cards, then you may have a harder time qualifying for a home loan.

Of course, your income will matter, too. The more you earn, the more room you have to carry debt but still qualify for a mortgage. But on the flip side, if you don't earn very much and have a large amount of student debt relative to your income, you may find that you're unable to get a mortgage until your circumstances change. 

Should you delay homeownership if you have student debt?

Your decision to apply for a mortgage while carrying student debt should really boil down to your ability to afford that home in the first place. Part of the problem with having student debt is that those loan payments will monopolize a chunk of your income, thereby making it harder to not only swing a mortgage payment, but also save enough for a reasonable down payment. And the less money you put down on your home, the higher your monthly mortgage payment will be. 

However, if your earnings are such that you can afford to make your student loan payments and cover your housing costs, then there's no need to wait -- unless, of course, you're denied a mortgage, in which case that option is off the table. 

Student loans can also impact your credit score for better and for worse. Making all of your monthly loan payments on time and in full will help your score, while being late with payments will hurt it. And the lower your credit score, the less likely you are to get approved for a mortgage, or one with a reasonable rate. 

If you're concerned about your ability to get approved for a mortgage given your student debt situation, it might make sense to delay home ownership for a year or two, save extra money, pay down a large chunk of your loans, and then apply. Remember, the less money you owe in student debt, the easier it'll be for you to take on another type of debt. But ultimately, student loans by themselves aren't an automatic deterrent to getting a mortgage and buying a place to call your own.

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