Student Debt Could Impact Your Ability to Buy a Home

Credit Score

The good news about student loans is that as long as you are making your monthly payments on time, student loans can have a positive impact on your credit score. By making payments on time, you are showing the lender that you are responsible and reliable and that you understand how to manage your debt. While payments made on time can positively impact your credit score, late payments and delinquencies can have a negative impact.

Debt-income Ratio

This is one of the key factors in qualifying for a mortgage. This is the measure of how much your monthly income goes toward paying off your debts. Banks and lenders use this metric to determine how much mortgage you can qualify for. If you have a good amount of debt and a small income, this can prevent you from qualifying. When you are thinking of buying a home and you have student loans, it’s important to carefully consider deciding to take on other debt such as credit cards and vehicle loans.

Down Payment

The down payment can be the trickiest part of buying a home with student loan debt. If you can save money, shouldn’t you use that money to pay on your student loans? The first thing to consider is the interest rate on your student loans. If your interest rate is high on your private student loans, it may make sense to pay those down first and then start saving for your down payment. If you have federal loans or you can consolidate your loans into a low-interest payment, you might get more benefit out of saving your money for a down payment.

Save every bit of money that comes your way – birthday money, tax refunds, and so on. Save this money to put toward your down payment on a home.

It is possible to have student loan debt and be able to purchase a home. It may take more time to purchase a house than if you didn’t have loans, but before you know it you will be enjoying your new home!

Do you have questions?

Count on your experienced team at Ericson, Scalise & Mangan, PC to provide you with sound guidance for your Estate Planning, Elder Law, Real Estate, Probate, Trust & Estate Administration, and other legal needs. For assistance, contact us today at (860) 229-0369, or email us at

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