Mortgage  Question?
How Student Loans Affect Mortgage Qualify in College

How do student loans affect your ability to qualify for a mortgage if you are still in college and not making payments on the loans? My spouse and I are planning on applying for a mortgage but I have three years of college left and I do not start paying my student loans until six months after I graduate.

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

We provide a comprehensive overview of how to get a mortgage with student loans that you can review. Your situation is somewhat unique because you are currently enrolled in school and it sounds like you will be applying for the mortgage with your spouse several years before you actually start paying your student loans.

In most cases lenders factor in student loan payments if the loans appear on your credit report, even if the loans are deferred and you are not currently required to make any payments. For student loans that are deferred, which applies to you because your payments are deferred until six months after you graduate, the monthly debt payment for the loan is calculated as either 1% of the outstanding loan balance or the full payment amount according to your loan documents. So depending on the calculation method used by the lender, your full loan payment or 1% of your loan balance would be counted as debt and factored into your debt-to-income ratio when you apply for a mortgage, even if your student loans are currently deferred and your required monthly payment is $0.

Please note that the lender calculates your student loan payments based on your outstanding student loan balance when you apply for the mortgage. For example, if you have $15,000 in student loans outstanding and the lender applies the 1% method to determine your student loan payments, the lender would include $150 in monthly student loan payments ($15,000 * 1% = $150) to determine your ability to qualify for a mortgage. You can use our Mortgage Qualification Calculator to determine what size mortgage you can afford based on your monthly gross income and debt expense.

We always recommend that you contact multiple lenders to understand how they would handle your unique situation. You can review lenders in your area by clicking INTEREST RATES We advise you to contact at least four lenders as qualification guidelines vary. Plus, shopping multiple lenders is the best way to save money on your mortgage.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

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