Do student loans go against you when applying for a mortgage?

There’s no doubt that student loans and mortgages will continue affecting millions of people as student debt continues to rise due to increases in university tuition. Student loans have delayed buying a home for 29% of those with student loan debt across the country. With current mortgage rates at over-time lows, you may want to buy a home as soon as you are ready. However, if you have student loan debt, you might be wondering if it would impair your ability to secure a good mortgage offer if you can even buy a home at all. Let’s see how student loans go against you when applying for a mortgage.

Do student loans go against you when applying for a mortgage?

Do student loans go against you when applying for a mortgage?

Student loans aren’t usually treated the same way as other types of borrowing, but that doesn’t imply they don’t influence your financial situation. When you apply for a mortgage, your lender will look at all your previous monthly payment responsibilities, including student loans, to see if you can afford an additional monthly payment.

 The lender will check if you’re eligible for it and, the interest rate, based on your circumstances. A large deposit, a steady income, and a clean credit history will all assist your mortgage application, which is especially important if you have a lot of student debt. The more eligible you appear as a borrower, the more lenders will be ready to lend to you, boosting your chances of obtaining a decent deal.

The following factors affect your mortgage approval

  • Debt-To-Income Ratio

When you apply for a house loan, lenders look at your debt-to-income ratio to see if you’ll be able to handle all of your debts while also making your new loan payments on time.

Based on how much of your income goes toward debt payments, lenders set maximum limits for what your monthly mortgage payment can be. This is known as the back-end, or total, debt-to-income (DTI) ratio. Lenders do a back-calculation to see how much of a loan you can responsibly take out. Although the specifics vary by loan type, you’re usually limited to a DTI percentage of roughly 43%. If you pay $200 a month for student loans and wish to buy a house with a $1,300 monthly mortgage payment, your monthly debt payments will be $2,000. Based on the $2,000 figure, your debt-to-income ratio is around 30% of your total monthly income is $6,000.

Also, note that an applicant’s debt exceeding 43% makes most lenders deny them a loan. 

  • Credit Score

Lenders examine your credit score and previous debt, such as student loans, which is necessary for you to qualify for a mortgage. Making on-time monthly payments, including student loan payments, helps you develop credit and boost your credit score.

Lenders look at your credit grade and origin to know the risk they’re taking on by granting you a loan. A good credit score with no delinquencies or defaults assures lenders that you will pay back your new loan on time. Lenders evaluate your credit score to assess if you qualify for a mortgage and the interest rate on the loan. Borrowers with higher credit scores are often eligible for lower interest rates, while those with lower credit scores are typically charged higher rates.

  • Consider Adding A Co-Signer To Your Contract.

If you’re a part-time student with a job or a working partner, you might be able to get a small loan if you have enough. If you don’t have enough income, you might be able to get a mortgage with a co-signer. If a parent, guardian, or significant person has sufficient means, income, and good credit history, they may be allowed to co-sign the mortgage loan. The co-signer on a loan contract does not receive the loan proceeds, but he or she is responsible for repayment if you default on your payments. As a result, you must keep up with your payments, or you risk losing your guarantor.

Tips To Increase Your Chances Of The Approval

  • Make All Debt Repayments On Time

Clearing off your debts at an appointed time gives your credit score a boost which in turn is essential to getting a mortgage approval. Delays in repayment could limit your chances.

Make Use Of Specialized Mortgage Lenders.

These specialized lenders offer deals to you even with a bad credit score. Although they charge higher interest rates.

  • Clear Off Your Highest-Cost Debt

In the case where you have other loan debt aside from student loans, prioritize paying them off. This will help lower your debt-to-income ratio which will be assessed by lenders and is a convincing tool to get your approval.

If you wish to get a mortgage and you have a student loan,  you shouldn’t have to worry about it scaring away potential lenders as far as you can prove you’ll be able to pay off the mortgage you desire.


Modern student loans have no bearing on your credit score and, as a result, will have no bearing on other sorts of credit applications. Only students who began university before 1998 and defaulted on their loans are exempt from this restriction. To get approval, ensure your debt-to-income ratio is within the range of 40%, avoid delays in scheduled payment of debts, and ensure that you do owe beyond what you’ve stated in your mortgage application.


Q). Do Student Loans Affect Credit Grades?

Your credit grade will be affected if you have a student loan. Your credit report will include the number of your student loan and your payment details. Maintaining a decent credit score can be as simple as making timely transactions.

Q). Is Buying A House With Student Loans Possible?

It’s not a good idea to utilize your student loan for purposes other than your education some times student loans go against you when you applying for a mortgage.

Q). Will My Student Loans Affect My Ability To Obtain A Home Loan?

Your debt-to-income (DTI) ratio includes your school debts. Lenders use your DTI when determining whether you are eligible for a loan. If you already have a lot of student debt; adding to it puts you at risk of defaulting on both loans.