Mortgage Answers / Student Loans

Can I Buy a House With Student Loan Debt?

The Short Answer

Having student loans does not automatically stop you from buying a home. The lender counts a monthly student loan payment along with your other debts and income. The payment it counts depends on the loan program. Even if your current bill is $0, the lender may need to count a payment.

See how the student loan payment a lender counts can affect your home loan numbers.

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STUDENT LOANSOne payment

The payment your mortgage lender counts matters.

One bill for every mortgage
Different home loan programs can count different payments.

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How do student loans affect the numbers?

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See how much monthly income goes toward debt and the home payment. Your lender decides which income and payments count.

Share of monthly income going to debt37.5%

Monthly income before taxes$8,000

$1,000$25,000

Student loan payment the lender counts$300

$0$2,000

Other monthly debt payments$500

$0$5,000

Example monthly home payment$2,200

$0$8,000

Include the loan payment, property taxes, home insurance, mortgage insurance and homeowners association fees in the home payment. Do not count the same debt twice. The lender decides which income and payments count. The student loan amount may differ from your bill.

Total monthly debt, including housing: $3,000
Student loan uses: 3.8% of income

See the payment's effect

Without the student loan payment 33.8%

With the student loan payment 37.5%

Move the student loan slider to see how this share changes. A lower share leaves more income for other needs. Ask Troy which payment a lender would count. Do not change repayment plans or leave out debts based on this example.

This share is called your debt-to-income ratio, or DTI. It includes the home payment. Add the monthly debts and home payment, then divide by income before taxes. No one percentage guarantees approval. The lender must check your records and the full application.

Why lenders may count a different payment

Fannie Mae: your repayment plan matters

If your repayment plan based on income sets your actual payment at $0, the lender may count $0 with the right proof. If payments are paused through deferment or forbearance, the lender may count 1% of the balance or a documented payment that pays off the loan over the repayment period shown in your loan documents. A $0 entry on a credit report alone is not enough.

FHA: a $0 bill may still count as a payment

FHA generally counts the payment shown on your credit report or another documented actual payment when it is more than $0. If the reported payment is $0, FHA generally counts 0.5% of the amount you still owe each month. A lender must review any allowed exceptions and the required documents.

Freddie Mac: show proof of your current payment

Freddie Mac generally counts a current payment above $0 shown on your credit report or supported by documents. If the reported payment is $0, it generally counts 0.5% of what you still owe, unless documents show a different current payment above $0. An upcoming repayment-plan review, a payment increase or a documented exception can change the amount counted.

VA: review the documents with your lender

If you are eligible for a VA loan, ask the lender to review your repayment documents or proof that payments are paused. A current $0 bill does not automatically mean the lender can leave out the debt.

Ask Troy which student loan payment would count

What does the lender review next?

The counted student loan payment is one part of the application. Ask which documents are still needed.

Where do the loan costs appear?

A Loan Estimate separates the payment from the money due at closing. Use both when making a budget.

Could family help with upfront costs?

A true gift has no expected repayment. Check the donor and documents before moving funds.

A few good questions

Must I pay off all student loans first?

Not always. A lender reviews your full application and the student loan payment it must count under that home loan program's rules.

Does a $0 statement make my payment zero for every mortgage?

No. The lender checks your repayment plan, your documents and the home loan program's rules. It may need to count a payment even when your bill is $0.

Is a payment pause the same as a $0 payment based on income?

No. Fannie Mae has different rules for a payment pause, called deferment or forbearance, and a documented $0 payment under a repayment plan based on income.

Does expected forgiveness automatically remove the debt?

No. Expecting forgiveness is not enough. The lender needs the proof required by the loan program before it can leave out the debt.

More about: The payment your mortgage lender counts matters

The amount you owe is only part of the picture. A lender compares the monthly debt payments it must count, plus the new home payment, with the income it can count. Bring recent statements from the company handling your student loan. Also bring proof of your repayment plan or any payment pause, called deferment or forbearance. Your current bill may differ from the payment your mortgage lender must count.

More about: FHA treats a zero payment differently

FHA generally counts a payment above $0 shown on your credit report or supported by documents. If the credit report shows $0, FHA counts 0.5% of the amount you still owe. Written proof that a loan has already been forgiven, canceled, discharged or paid in full may allow the lender to leave it out. Expecting future forgiveness is not the same proof.

More about: Fannie Mae: your repayment plan can change the amount counted

Fannie Mae may allow a $0 payment if you have proof that it is your actual payment under a repayment plan based on income. If payments are paused through deferment or forbearance, the lender may use 1% of what you owe or a documented payment that repays the loan over the term shown in your loan documents. A $0 entry on a credit report alone is not enough. For example, 1% of a $40,000 balance is $400 per month. This is a payment used to review a home loan, not necessarily your actual student loan bill.

More about: Freddie Mac has separate requirements

Freddie Mac generally counts a current payment above $0 shown on your credit report or supported by documents. If the reported payment is $0, it generally counts 0.5% of what you still owe, unless documents show a different current payment above $0. Ask which payment applies to your application. An upcoming review of your repayment plan, a payment change or a documented exception may change the amount counted. Your lender must review the documents.

More about: Compare the rules before changing your student loan payments

For a $40,000 balance, 0.5% is $200 per month. This example shows a calculation, not approval. The lender also reviews your credit, income, other debts, savings and its own rules. Ask how your payment plan is treated before changing plans or using savings to pay off debt.

What does the debt-share result mean?

Your debt-to-income ratio shows how much of your monthly income goes toward debt payments, including the new home payment. Use the student loan payment your mortgage lender would count; it may differ from your current bill. Adjust the example to see the effect. Your lender decides which income and payments count. This tool cannot tell you whether you will be approved. Percentage points show the gap between two percentages. For example, going from 34% to 38% adds 4 percentage points.

How should I read this example?

See the share of monthly income going toward debt and the new home payment. Use the student payment your mortgage lender would count, which may differ from your bill. Your lender decides which income and payments count; this is not approval.

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