Not necessarily. While all debts factor into home financing, student loans aren’t automatic deal breakers.

Have a student loan? You’ve got company.

About 43 million Americans have school-related debt. That’s around 13% of the U.S. population, or close to one out of every eight citizens. Within that group, borrowers with the most student debt are between ages 35 and 49. Nevertheless, people in that age group buy homes more than other groups. According to the National Association of Realtors (NAR), 35 is the median age of first-time homebuyers. The NAR also reports that around 38% of first-time buyers have student loans.

Know Your DTI

That’s your debt-to-income ratio: your monthly debt payments divided by your gross monthly income. Lenders typically consider how much of your income you put toward paying off debts, including student loans. If much of your income goes to student loan payments, it may affect how much you can borrow for a mortgage. Lenders usually want a DTI of 43% or lower, though some cap mortgage approval at 36% DTI.

Lower Your DTI

It raises your chances of getting approved for a mortgage. How can you lower your DTI? Try to pay off smaller debts, such as credit cards. If you can swing it, a second job or a side hustle can increase your income and positively impact DTI. Don’t apply for a new credit card, as even one with a low limit can negatively affect your DTI if you make charges.

Choose the Right Loan Program

First-time homebuyers with student loans often choose FHA loans. These government-backed mortgage programs require as little as 3.5% down. Veterans and active-duty service members often opt for VA loans, which may not require a down payment. Student loans shouldn’t stand in the way of these or other mortgage options.

Work with Experts

Did you know that a family member or a close friend can give you the money for a down payment on a home? That a co-signer may give a lender the confidence to approve a mortgage? That your credit score might not be accurate and you can fix errors? The loan experts at the Decker Group know these things and more. Working with seasoned professionals is often crucial to home ownership.

Don’t just assume that your student loan is a roadblock to owning a home. Ask an expert. Contact a member of the Decker Group online or at (972) 591-3097.