How To Strategically Qualify For a Mortgage
Even With Student Loan Debt
Do you feel nauseous when thinking about buying a home with 5- or 6-figures of student loan debt?
We hear you. And we’re here to help too.
There are options & strategies out there that can specifically address your student loan worries. But many mortgage lenders don’t offer them! We do. And we’d love to help you reach your goal of homeownership. Let me show you how…
We Love Helping Buyers In Tough Situations
Many first-time buyers (with or without student loan debt) also need down payment assistance, to help make homeownership more affordable. We love helping these kinds of homebuyers; it’s exactly what we do best. Now, let me tell you why qualifying for a mortgage with student loan debt doesn’t have to be so hard.
But first…start by submitting a Pre-Approval Application. This will give us the info we need to help you create a home loan plan. Our new online pre-approval process is faster & easier than ever before.
More Student Loans, More Problems?
Debt has a magnified effect on your qualifying ability — in other words — it drastically affects the size of the home loan you’re eligible for. Debt and specifically student loan debt, because of the sheer size of student loans these days, can seriously diminish a person’s ability to qualify for a mortgage.
If you have $100,000 in student loans…that doesn’t mean you’re going to qualify for $100,000 less than someone without educational debts (keeping all other factors the same). Often times that $100k in student loans equates closer to $200k in diminished qualifying power. That’s a devasting result for many prospective homebuyers!
EXAMPLE: Under some loan programs (and with some lenders), if you take a homebuyer that makes $60,000 a year but has no debts, that person would probably qualify for approx. a $400,000 home purchase. But now give that same person ONE $100,000 student loan debt. That could easily result in the person qualifying for nothing more than a $200,000 purchase price.
But what is even more sad about the student loan situation is that these large loans are almost always paid off slowly. Very slowly. Over the course of 10, 15, or even 20 years.
So, unfortunately, after a full year of paying down a loan…you may have only paid off 5% of the total amount. That 5% reduction does very little to improve your ability to qualify.
This all adds up to the painful realization that student loan debt could bar people from homeownership for YEARS!
How To Fight Back & Reach Homeownership
Here’s the #1 lesson you should leave this article with:
Anyone with federal student loans can apply for what’s called “Income Based Repayment“, also known as, IBR.
As a real-world example, not long ago I had a client who’s monthly payment was approximately $1000 per month before IBR. After IBR kicked in, their monthly student loan payment plummeted to about $80 per month. Seriously.
(But this is just an example, and your results will vary.)
So, step #1 is to apply for IBR. Once you have your IBR documentation, you can hand it off to us (your lender) and we will re-score your credit report on your behalf.
Once that’s complete, we can take a completely fresh look at your qualifying situation.
When all is said and done, you’ll have a lower monthly student loan payment and you’ll have a fraction of the debt liability that you previously had. Lenders won’t run for the hills anymore.
CRUCIAL TO REMEMBER ==> NOT ALL LENDERS, AND NOT ALL HOMEBUYER PROGRAMS WILL ACCEPT IBR! BUT WE DO.
It’s Time For Your Victory Dance
Instead of continuing to pay rent, which means not creating any equity wealth for years. To potentially earning 5- or 6-figures in home equity. That equity could end up being one of the best and only ways you’ll be able to pay off your student loans any time soon!