Student Loans and Buying a Home: What You Need to Know

Can Student Loans Affect Buying a House?

Yes, student loans can affect your ability to buy a house by impacting your credit scores, savings and debt-to-income ratio (DTI), key factors lenders consider when you apply for a mortgage loan.

Here's a look at how student loans can factor into these three key areas.

Credit Scores

Like other types of debt, student loans can help or hurt your credit scores depending on how you manage the payments. Late or missed student loan payments can hurt your credit scores, and will stay on your credit reports for seven years from the date you first miss the payment. (Keep in mind that missed student loan payments aren't added to your credit report until they are at least 90 days past due, giving you time to bring your account current before facing score damage.)

On the other hand, making student loan payments on time every month can help your credit scores. When lenders look at your credit report and see that you've been managing your student loans responsibly, they'll view it as a sign of your creditworthiness and consider you more likely to make on-time mortgage payments.

Tip: If you haven't already done so, consider setting up automatic payments to prevent missed payments that could damage your credit.

Learn more: How to Build Credit to Buy a House

Savings

Saving for a down payment can be challenging, especially if you're managing substantial student loan payments. But the more you can put down on a home, the less you'll have to borrow—and the better rates you could potentially qualify for. (More on this below.)

Healthy cash reserves also show lenders you have the means to cover your mortgage payments if needed, and may be required by some lenders.

Debt-to-Income Ratio (DTI)

Your DTI shows how much of your monthly income goes toward debt, and is one of the main factors mortgage lenders consider. To calculate your DTI:

1. Add up your monthly debt payments, like minimum credit card payments, car loans and student loans.
2. Divide by your gross monthly income (the amount you earn before taxes and withholdings).
3. Multiply by 100 to get a percentage.

Example:

• Monthly debt: $2,000
• Monthly income: $5,000
• DTI = 40% ($2,000 / $5,000)

Types of DTI Ratios

Mortgage lenders generally consider two kinds of DTI:

• Front-end DTI: The percentage of your income that would go toward housing (that is, your proposed mortgage, taxes and insurance).
• Back-end DTI: The percentage of your income that goes toward all debts (including housing, other loans and credit cards).

Having student loans increases your monthly debt payments, raising your DTI. Many mortgage lenders look for a back-end DTI below 43%, or sometimes below 36%, depending on the type of loan. If your student loan pushes your DTI too high, you may have trouble qualifying for a mortgage.

Should You Pay Off Your Student Loans Before Buying a House?

Whether to pay off student loans before buying a house depends on how the loans affect your monthly budget, savings and DTI, but there are other factors to consider too.

When It May Make Sense to Buy

• Your DTI is within the range lenders prefer.
• Your student loan payment is manageable even with a mortgage payment.
• You have money saved beyond your down payment.
• You have a reliable income and steady employment history.
• You have a good credit score.

When It May Make Sense to Wait

• Your DTI is too high to qualify for a mortgage.
• Paying down your student loan would make a mortgage significantly more affordable.
• Buying a home would drain your savings and stretch your budget to the limit.
• Your income and employment are not stable.
• You are still working on improving your credit.

What to Consider Before Deciding

When deciding if it's a good time to buy a home, consider these factors:

• Estimated mortgage payment: This includes principal, interest, taxes and insurance (PITI).
• Down payment amount: Use Experian's free mortgage affordability calculator to see how various down payment amounts would impact your mortgage costs.
• Closing costs: Due at closing, these typically range from 2% to 5% of the home's sale price.
• Emergency savings after closing: You'll need an emergency fund to handle the unexpected expenses, such as home repairs, that tend to crop up for new homeowners.

Learn more: Complete Costs of Buying a Home

How to Reduce Your Student Loan Debt

If you're hoping to buy a home and your student loan debt is standing in the way, there are several steps you can take to reduce it.

Pay More Toward Your Student Loan Every Month

Even small extra payments can chip away at your balance faster and reduce your future interest costs. Review your budget for expenses you can cut back and put the savings toward your student loans.

You can make extra payments toward the principal each month, make biweekly instead of monthly payments or put windfalls like tax refunds toward extra principal payments. (Check with your lender regarding any process for ensuring additional payments are directed to principal.)

Learn more: How to Pay Off Student Loans Fast

Consider Refinancing or Consolidating Your Student Loans

Refinancing and consolidating your student loans may both save you money, but they aren't the same thing.

Refinancing means using a new loan from a private lender to pay off one or more of your federal or private student loans. You may be able to reduce your interest rate and monthly payments by refinancing.

Consolidating means combining multiple loans into one monthly payment and can be done with a private lender or, if you have federal student loans, with the federal government.

Consolidating with the federal government won't reduce your interest rate, but it can lower your monthly payment by extending your loan term. Keep in mind that a longer loan term ultimately costs you more in interest. Federal consolidation may also lower your payments if it gives you access to repayment terms that weren't an option for your original loans.

Be aware: If you refinance or consolidate federal student loans with a private lender, you'll lose access to federal benefits you may want in the future, such as student loan forgiveness, deferment, forbearance or income-driven repayment plans.

Learn more: Is It Better to Consolidate or Refinance Student Loans?

Bring in More Income

Look for ways to earn more money, such as seeking a raise or promotion at your current job, getting a part-time job or starting a side gig. Increasing your income can help lower your DTI. It also gives you more money to put toward a down payment or paying off your student loan.

Look for a New Job That Offers Student Loan Repayment Assistance

The number of employers offering help with student loan repayment is growing, reaching 14% of companies in 2024, the Society for Human Resource Management reports. If you're open to a job change, finding an employer that will help with your student loans can make a big difference to your debt load.

Be aware: Mortgage lenders will review your employment history, looking for income stability, so you may want to wait several months after a job change before applying for a mortgage—and your employer's repayment benefits policies may take several months to be available for loan repayment.

Other Tips for Getting a Mortgage if You Have Student Loans

Focusing on these actions can help improve your chances of getting a mortgage with student loans:

Show Proof of Steady Income and Employment

Mortgage lenders generally require two years of employment history, although they may accept a shorter history if other aspects of your application are strong. It's not necessary to have been employed by the same company for two years, but a record of job-hopping could prompt lenders to examine your documentation more critically.

Having solid proof of income can help. Lenders generally require two years of tax returns, bank statements and W-2 or 1099 forms for mortgage preapproval.

Learn more: What Factors Do Mortgage Lenders Consider?

Avoid Taking on New Debt

Applying for new loans or credit cards or making large purchases on credit can lower your credit score, which could put your mortgage approval at risk.

Applying for new credit typically generates a hard inquiry into your credit report, which can cause a dip in your credit score. Getting a new loan also increases your DTI, and making major purchases with a credit card raises your credit utilization ratio, both of which can negatively affect your credit score.

Learn more: Things That Can Keep You From Getting a Mortgage

Make a Bigger Down Payment

A larger down payment can reduce the amount you need to borrow, lower your monthly mortgage payment and help you qualify for a lower interest rate. A 20% down payment can also help you avoid the expense of monthly private mortgage insurance (PMI).

However, many buyers put down less. In 2025, the median down payment for first-time homebuyers was 10%, according to the National Association of Realtors. Focus on choosing a down payment that keeps your mortgage payments affordable while leaving enough savings for closing costs and emergencies.

Tip: If family members offer you money for a down payment, be sure to follow the gift rules for your desired mortgage type. Lenders may restrict how much of your down payment can be gifted and require documentation to prove the money is not a loan.

Learn more: How Your Down Payment Affects Your Mortgage

Get Preapproved Before House Hunting

Applying for mortgage preapproval with several lenders can give you an estimate of how much you may qualify to borrow; your expected interest rate, fees and closing costs; the type of mortgage you are preapproved for and the maximum home price you can afford. It also signals you're a serious buyer.

Getting preapproved usually generates a hard inquiry, which can cause a small, temporary dip in your credit score. To minimize any negative impact on your credit score while rate shopping, limit all your preapproval applications to a 14-day window; credit scoring models will consider these a single inquiry.

Learn more: How to Get Preapproved for a Mortgage

Explore First-Time Homebuyer Programs

Government-backed mortgages from the U.S. Federal Housing Administration (FHA), Department of Veterans Affairs (VA) and Department of Agriculture (USDA) are probably the best-known programs available to help first-time homebuyers, but there are plenty of others.

You can find low- or no-down-payment mortgages, down payment grants, employment-based mortgages, mortgages offering discounted rates and no-closing-cost mortgages. There are also state and local first-time homebuyer programs.

Tip: You'll generally need at least a fair credit score to qualify for first-time homebuyer programs, although criteria can vary by program.

Learn more: First-Time Homebuyers: How to Qualify for Loans, Programs and Grants

The Bottom Line

If your student loan and other debt payments fit your budget and your credit and finances are in good shape, having student loans shouldn't prevent you from buying a home. But if you're already juggling significant debt on a tight budget, taking some time to lower your DTI, increase your income and improve your credit score could boost your odds of getting a mortgage.

Having good credit can help you qualify for a mortgage at lower interest rates. Start your home shopping journey by checking your credit scores for free with Experian and signing up for free credit monitoring. You'll get insights into actions that could help improve your credit and be able to track your FICO^® Score^Θ progress as you shop for a mortgage.