Keys & Degrees: Buying a Home While Paying Student Loans

Blog posted On June 05, 2025

Worried about taking on a mortgage while still paying off student loans? Don’t worry, those with degrees can still get house keys! In fact, if you’ve been responsibly paying your student loans month to month, you’ve potentially boosted your creditworthiness over time. Between helpful tips for loan approval and affordable mortgage options, we’re here to set you up for success, student loans or not!

Qualifying Factors to Consider

1. Your Debt-to-Income Ratio (DTI)

Ensuring that you’re making timely monthly payments on your student loans can factor into your creditworthiness and will affect your DTI. In order to boost your chances at loan approval and qualifying for a lower rate, you’ll want to maintain a favorable credit score. If you fall behind in your payments, your FICO score will take a hit, so be wary of this! Another tip: consider consolidating your student loans into one bigger one, potentially with a lower APR.

2. Timely Loan Payments

It’s important to reiterate this advice: making your loan payments on time is vital to qualifying for a mortgage. If they’re in default (i.e. you haven’t made a payment in 270 days or more), you may not be able to qualify for government-backed programs like FHA, USDA, and VA Loans.

3. Your Income

You’ll want to consider ways of increasing your income and adding additional avenues of income to your lifestyle. Whether you want to take on secondary work, open yourself up to freelancing opportunities, or pivot your career trajectory at your company into a higher-paying role, these are some ways to hike your income up. Additionally, a borrower’s educational background and future potential income is often taken into account, particularly if it’s a profession that possesses strong employment prospects.

4. The Down Payment

The more you’re able to put down on a house, the more favorable your loan terms will be! Put your windfalls like tax refunds and holiday bonuses towards your down payment fund. However, if you’re already paying off student debt, you likely don’t have a few thousand sitting around to boost the amount you can put down. Don’t worry, there are many types of down payment assistance options available. For instance, if you’re a Veteran, a VA Loan provides 100% financing, so you can take advantage of a mortgage with zero down. Or consider our unique down payment gifting platform, HomeFundIt ™ to raise funds from your community. Take a peek at our next section to evaluate more loan options like the VA Loan.

Explore Affordable Loan Options

• Fannie Mae HomeReady® – A low-down payment option for lower-income borrowers, with cancellable mortgage insurance
• Freddie Mac Home Possible® – A 3% down payment option for lower-income borrowers, with flexible housing options for single-family homes, manufactured housing, and energy-efficient properties
• FHA Loan – Insured by the Federal Housing Administration (FHA) and requires a down payment of just 3.5%
• VA Loan – For active-duty service members, Veterans and surviving spouses, with no down payment or mortgage insurance required (VA funding fee required)
• USDA Loan – For borrowers in predetermined “rural” areas and designated suburban areas, USDA Loans are provided by the U.S. Department of Agriculture, designed to help low-to-moderate-income households with a 0% down payment

You’re not alone with your student loans. According to the Pew Research Center, a quarter of U.S. adults under 40 are paying off student loan debt. Fortunately, your loans don’t have to get in the way of homeownership. One of the best ways to start is with a preapproval just to see what you’re working with and what you need to start working towards.

Ready to embark upon your home loans adventure? With that college degree under your belt, we already know you have what it takes to be a savvy borrower. Get started today!

Source: Bankrate, Yahoo! Finance