Whether you recently graduated college, or it’s been a few years, it’s understandable to possess some amount of student loan debt. It seems that news headlines are regularly suggesting that the graduates are suffering from the stress of student debt, and that pressure can be even worse for those who are looking to buy a home and start putting some roots down in the local community.
So – are you worried that past student loan debt will affect the chances of buying a home? Here’s how to overcome it.
Make A Budget And Determine A Comfortable Monthly Payment
The first and most important step anyone with debt can take is to evaluate your financial situation and determine what you are comfortable spending on a home payment. Home lenders will typically allow around 50% of your monthly gross income to go towards your monthly debts and house payment.
But not everyone wants to spend half their money on debts, and deciding what is comfortable for your lifestyle is a good place to start. But remember, what you’re comfortable paying is typically going to be a bit less than what you’ll need to pay to live in the home and area you want. It’s normal and typical for people to increase this number when they start home shopping. Most people understand that even though it might be a little tight the first few years, income typically increases over time, and they’ll be glad they made a stretch early to avoid getting into a house that’s not the right fit for family size or lifestyle.
Check-In With A Mortgage Advisor
Rest assured, a Mortgage Professional will help you understand exactly how monthly debts affect what home size you can afford. FHA, VA, Conventional and other loan types factor student loan debt differently, and guidelines change regularly. Additionally, some loan programs allow student loan debt exclusion in certain circumstances, where other loan types require to count a percentage. Either way, talking to a pro is the most likely way to ensure the information you’re getting is not only accurate, but also timely.
Reach Out Sooner Than Later
While it may increase monthly expenditures during the payback period, student loan debt isn’t a barrier to home ownership. For more information and to view home financing options, contact us today. Our professional team of loan officers is happy to help.
