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Can you buy a house with student loan debt?
If you’re buying a house with student loan debt, there are ways to get a mortgage. That holds even if you’re saddled with a hefty monthly student loan payment.
Here’s how student loan debt can affect your mortgage eligibility. You’ll also find some tips to make the home buying process go as smoothly as possible.
Check your home buying eligibility. Start here (Nov 11th, 2026)
How lenders view student loan debt
Bogged down by student loans? You’re far from alone.
In 2017, about one in four Americans with a graduate degree had student debt, the Census Bureau reports. Collectively, borrowers in America owed $1.58 trillion in student loans at the end of 2021, according to the New York Federal Reserve.
Student loan debt can affect your ability to qualify for a mortgage loan. Why? Because student debt impacts your debt-to-income ratio, or DTI.
Student loans & your debt-to-income ratio
DTI is your total monthly debt payments (such as student loan, car and credit card payments) divided by your gross monthly income. Mortgage lenders consider your DTI ratio when assessing your ability to repay a home loan.
Let’s say you’re earning $5,000 a month and paying $600 toward debts each month. Divide $600 by $5,000 and your DTI ratio is 0.12, or 12%. But, if you add a $1,000 monthly mortgage payment to the mix, your DTI jumps to 32%.
Lenders like to see loan applicants with low DTI ratios. Historically, these borrowers are less likely to default on their mortgage payments. There is no single DTI cap. Fannie Mae’s Desktop Underwriter can approve up to 50% DTI. For manually underwritten loans, the limit is 36%, or up to 45% with strong credit and reserves. FHA’s base limit is 43% total debt, up to 50% with compensating factors, and automated approvals can go higher. USDA uses 29/41, and waivers are possible.
The bad news: Student loan payments alone can push a new graduate’s DTI high. That may explain why more than one in four student debt holders say their debt has impacted their decision or ability to purchase a home. A 2021 survey by the National Association of Realtors showed that result.
Fortunately, there are steps you can take to lower your DTI ratio and make homeownership a reality, even with student loan debt.
Step-by-step guide to buying a house with student loan debt
1. Pay down some debts
Reducing your overall debt load can strengthen your mortgage application. So, consider paying off a large chunk of any significant debt on credit cards or an auto loan. That can help lower your DTI ratio and make you a more attractive mortgage borrower.
2. Raise your credit score
Credit score is another component of your financial situation that lenders consider when evaluating loan applications. Therefore, make sure your credit history is in tip-top shape before applying for a mortgage.
This is especially important because a higher credit score typically translates into a lower interest rate. In turn, that often means a lower monthly payment on your new home.
FICO is the most popular credit scoring model used in the U.S. for lending decisions. Scores range from 300 to 850. The scoring range denotes ratings: Poor, Fair, Good, Very Good, and Exceptional. Most mortgage lenders look favorably at borrowers with Good, Very Good, or Exceptional credit ratings.
Fannie Mae no longer sets a flat 620 minimum credit score for loans run through Desktop Underwriter. However, many lenders still set 620 as their own minimum. Only borrowers with excellent credit (often mid-700s or higher) can qualify for the best interest rates.
One way to improve your credit score is to get a credit line increase. This will lower your credit utilization ratio, part of the “amounts owed” category that accounts for 30% of your FICO score.
Also, check your credit reports for errors that may be dragging down your score. You can get your credit reports for free at AnnualCreditReport.com.
Down payment help and co-signers
3. Look into down payment assistance programs
The bigger your down payment, the less money you have to borrow to purchase a home. And a smaller loan amount equates to a lower monthly payment. That will help if your DTI is already high because of student loan debt.
Most conventional home loans require a down payment of at least 3% to 5% of a home’s sales price. But if you’re having trouble putting a down payment together, you may qualify for down payment assistance.
As of 2026, there are more than 2,800 down payment assistance programs that offer qualified home buyers grants, loans and/or tax credits. You can search for programs and view eligibility requirements at Down Payment Resource.
4. Consider finding a co-signer
A co-signer is a person who is legally responsible to cover your mortgage if you fall behind on your loan payments. Enlisting a co-signer, such as a parent, may make you more qualified for a mortgage. That’s because lenders will take your co-signer’s income, credit score and assets into account. Including a co-signers income on your application might mean you can qualify even with a high DTI due to student loan debt.
Best loan types for buying a house with student loan debt
Conventional loans typically require a minimum down payment of 3% to 5%. If you have student loan debt and are struggling to assemble a down payment, there are other types of loan programs to consider.
FHA loans
Established during the Great Depression, Federal Housing Administration (FHA) loans enable you to qualify for a mortgage with a down payment as low as 3.5%. You can also get approved with a lower credit score. FHA allows maximum financing with a score of 580 or higher, and 10% down with a score of 500 to 579. Finally, FHA loans often allow a higher debt-to-income ratio than conventional mortgages. That can make all the difference to borrowers with student loan debt.
The caveat: FHA borrowers must pay a mortgage insurance premium (MIP) of 1.75% upfront. They also pay an annual premium, paid monthly, of 0.55% for most 30-year loans (0.50% with 5% or more down). Loans over $726,200 pay 0.70% to 0.75%, and 15-year loans pay 0.15% to 0.65%.
USDA loans
U.S. Department of Agriculture (USDA) Rural Development loans are available only in eligible rural areas. In general, these are places with fewer than 10,000 residents, though some larger towns qualify. (You can see if your town is eligible at USDA.gov.) USDA loans have no official credit score minimum requirement and allow for DTI ratios of up to 41%, or 44% with a waiver. Plus, borrowers can put as little as 0% down. There are a couple of drawbacks, though. USDA loans charge an upfront guarantee fee of 1% of the loan amount. They also charge an annual fee of 0.35% of the average unpaid balance.
Physician loans
If you’re a recent medical school graduate, a physician loan (or “doctor loan”) may be a good option. Physician loans often allow for very low down payments. Each lender sets its own credit score minimum. And they might have special allowances to help borrowers who incurred a large amount of student loan debt in medical school.
Frequently asked questions about buying a house with student loan debt
Will student loans affect buying a house?
Your student loan debt could impact your ability to qualify for a mortgage. Your debt-to-income (DTI) ratio is your total monthly debt payments divided by your gross monthly income. That includes student loan, car loan and credit card payments. If your DTI is high, you may have trouble qualifying for a home loan. Lenders set DTI limits by program.
Should you pay off student loans before buying a house?
You don’t need to pay off your student loans to qualify for a mortgage. Still, keeping up with your student loan payments matters. If you miss a monthly payment, your credit score could take a big hit, which could hurt your eligibility for a home loan.
Do mortgage lenders look at student loans?
Absolutely. Lenders look at a variety of types of debt when reviewing loan applications and sizing up potential borrowers. These include student loans, auto loans, personal loans, alimony and credit card debt.
Can you get a mortgage if you have student loans in deferment?
Deferment probably won’t negatively affect your ability to get a mortgage. But mortgage lenders will still include your loans when determining your debt-to-income ratio. The same is true if your student loans are in forbearance, or if you have an income-based repayment plan.
Can student loans be refinanced into a mortgage?
For borrowers with student loan debt that carries a high-interest rate, it may be possible to refinance that debt into a mortgage using a cash-out refinance. But this will change your loan term and could likely increase the interest you’ll pay in total over the life of the loan.
Can you qualify for a mortgage if you have student loan debt?
Yes, you can still get approved for a home loan even if you have student loan debt. Proof: In 2020 nearly a quarter of all home buyers, and 37% of first-time buyers, had student debt. Their typical outstanding student loan balance was $30,000, a National Association of Realtors survey found.
Whether you qualify for a loan will ultimately depend on your credit score, income, debts and down payment amount. But don’t let student loans alone deter you from starting the home buying process.
Check your home buying eligibility. Start here (Nov 11th, 2026)
