The challenge is real when you are a first time home buyer trying to find a good deal in a market where rents keep rising and low value homes become scarce - add in the high amount of money you still owe to your student loan and this becomes a primary reason why many potential buyers assume that home ownership is something they cannot afford. However, recent studies show that college graduates with student debt are actually minimally affected by their remaining loan when trying to own a home.
Here are some tips from people who were able to get mortgages even while on student debt:
Toni Husbands of Debt Free Divas says that the use of the debt snowball method is an intelligent way to go. Husbands still owed $13k, but since the loans were through Salli Mae, a 1 year forebearance was possible. Meaning, Husbands was able to pause the loan payments, using the time to pay off other smaller loans that also needed to be paid for. Although there is still interest on the student loan, clearing up the other debts was made easier. After just a year, the student loan was given more focus with no other past loans to think about. And in just 1.5 years, Husbands' remaining student loan debt was fully paid for.
Katie Brewer of Your Richest Life Planning says that they did not let the student debt hold back their desire to buy a home. However, what they did was purchase a home that fit into their budget, rather than get one that will stretch their budget.
Jacob Irwin of My Personal Finance Journey shares that the student debt did not impact their home purchase at all, since the home they chose to buy was affordable based on their monthly income. Furthermore, they do not believe that paying off the student loan is a top priority when planning to get a home loan or buy a home, as long as the debt is fairly low, the interest rate is reasonable, and the whole thing does not acquire a large portion of the monthly income.
