Yes, you can qualify for a home loan... even if you have student loans!

I get a lot of questions from buyers and sellers about mortgages! Here is some information one of my lender partners gave me to share with you:

Contrary to current popular opinion, student loans are not the death of one’s ability to buy a home.  More important is that all bills, including student loans, are ALWAYS paid on time.  As long as income is high enough to support a house payment + other recurring monthly debts like car payments, credit card payments and student loan payments, then there has never been a better time to invest in home ownership.

A couple of quick definitions:  Front end Ratio:  Proposed housing payment as a percentage of gross monthly income.  Back end Ratio:  Proposed housing payment + other recurring monthly debt as a percentage of gross monthly income.

Lenders typically want your front-end Debt to Income ratio (DTI) to be less than 31 percent, and your back-end DTI to be less than 43 percent.  However, the Federal Housing Administration ( FHA) typically allows more flexibility. The FHA also excludes student loan payments that are deferred until at least 12 months after the anticipated closing date from your DTI.

In addition to credit scores, what do lenders look at when it comes to a credit report?   The crucial time-line is the most recent 12 month history for all open accounts.  All payments made within the past twelve months must be paid on time….no exceptions.  Collections?  DO NOT pay them off unless your loan officer otherwise directs you to do so.

Thanks for reading! Have an idea for a future post? I'd love to hear from you! Shoot me an e-mail: Jeff@JeffSellsGeorgia.com or visit me online at http://www.JeffSellsGeorgia.com 

Credit: Randi Krasnoff, Sr. Loan Originator, Silverton Mortgage Specialists