Student Loans and Buying a Home, What First Time Buyers Should Know
About 1 in 3 first time homebuyers already have student loan debt when they buy. If that number surprises you, it should tell you something. A lot of people are buying homes while still paying off a degree, and you could be one of them sooner than you think.
The Number That Should Ease Your Mind
According to the National Association of REALTORS, roughly 33% of first time buyers carried student loan debt when they purchased their home, with a median balance around $30,000. That is not a small, rare group. That is a huge chunk of the buyer pool right now.
If you have been assuming your student loans put you in some kind of special disqualified category, this stat alone should change your thinking.
How Lenders Actually Look at It
Here is where most of the confusion starts. Buyers assume student loans get treated differently than other debt. They usually do not. According to Freddie Mac, lenders calculate your debt to income ratio by comparing your monthly debt payments to your gross monthly income, and your student loan payment gets folded into that calculation the same way a car payment or credit card payment would.
Your income, your credit history, and your full financial picture all matter more than the simple fact that a student loan shows up on your credit report.
Guessing Costs You More Than Asking Does
The buyers who lose the most time are the ones who never actually ran their numbers. They see a headline about student loan policy, assume the worst, and quietly shelve their home search for another year. Meanwhile, someone with a similar loan balance runs their numbers with a lender and finds out they already qualify.
There is no downside to finding out where you stand. There is a real downside to guessing wrong and waiting longer than you needed to.
What We See With Buyers Here in the Western Suburbs
We regularly help first time and out of area buyers move fast once their numbers are in order, sometimes going from a first real conversation to an accepted offer in under a week. That speed almost always comes down to buyers who got their financing sorted early instead of waiting.
Naperville, Aurora, Oswego, and Plainfield each have a different mix of price points, so what you qualify for here depends on your specific numbers, not a national headline.
Frequently Asked Questions
Do I have to pay off my student loans before I can buy a home?
No. In most cases, lenders evaluate student loan debt the same way they evaluate other monthly debts, as part of your overall debt to income ratio.
How much student loan debt is too much to buy a house near me?
There is no single cutoff. It depends on your income, your other debts, and your credit. A lender can run your specific numbers and tell you exactly where you stand.
Can I get pre-approved if my student loans are in deferment or income based repayment?
Yes, though the way your payment gets calculated can vary by loan program. This is worth discussing directly with a lender since the rules differ depending on your situation.
Does paying off my student loans faster help me qualify sooner?
It can lower your debt to income ratio, but it is not always necessary. Many buyers qualify with student loans still on the books. Running your numbers is the only way to know for sure.
If student loans have had you sitting on the sidelines, let’s find out where you actually stand. You can also start browsing homes anytime on our Zenlist search.
Ready to make your next move in the western suburbs of Chicago?
We are here to help you every step of the way, whether you are buying, selling, or just exploring your options.
Julia Corkey & Vickie Schoenfeld
Team Elite Realtors at Baird & Warner
630-286-9777 | [email protected] | www.homesbyteamelite.com
Book a Consultation | Get Your Home Value | Search Homes on Zenlist
Follow us: Facebook | Instagram | YouTube
Licensed REALTORS® proudly serving Naperville, Aurora, Oswego, Plainfield and the Western Chicago Suburbs
