Student Mortgaging | The Basics of Qualifying for Loans

With the pile of student loans awaiting payment after college graduation, many new grads are wondering the same thing… How am I going to qualify for a mortgage loan when I still have student loans to pay off? 

Qualifications for home loans vary in requirements depending on which specific loan the student is aiming to receive. Student mortgaging is not as intimidating or impossible as it may seem to new grads. Keep reading to learn more about qualifying for mortgage loans while having student debt. 

The Start-Up Process

Before getting into loan specifics let's revisit some mortgaging basics that you will go through in the early stages of the home loan process. The first step you’ll have to plan for is preapproval. A preapproval letter states that you are a good candidate for a mortgage loan based on the information documented. Your lender will ask for this documentation, as well as permission to view your credit history and analyze your credit report. Having good credit can help the loan process move along faster, as students are more commonly approved for their desired loan with a good credit score. 

Most preapproval processing also provides you with an estimate in terms of your achievable loan amount. This is a great number to compare to your home loan goals and help build a realistic financial plan for your new home. This also helps you shop for homes within budget.

How Lenders View Student Loans

You don’t have to be 100% debt-free to get a mortgage loan in 2022. Lenders want to know you have enough income to pay off your debts, even with additional student debts on your plate. The more debts you have, the less likely you are to get your ideal home loan. However, nothing is impossible. Start with self-analyzing your financial debt and your home loan needs. Talk to a lender openly about your finances and they will give you the information and feedback you need to move forward in the loan process. 

Qualifying with Student Loans

A good tip for those with student loan debt who seek a mortgage loan is to consider all loan types. When existing debt is brought to the table, having an open mind when it comes to the type of mortgage loan you may be offered is key. Consider all options and select the one that is most beneficial to your financial situation and future financial goals. Don’t be discouraged if you do not get accepted for the home loan you initially wanted. There are plenty of options out there for you!

Another good tip for obtaining a home loan while having student debt is to lower your DTI ratio and try to pay off as much as you can before obtaining your mortgage loan. This will help ensure you get the home loan you are looking for and lenders will be pleased with your ability to pay off loan debt. 

If possible, it is also helpful to increase your income. With large amounts of debt, larger-income families tend to get approved for more loans at a faster rate. This is because, despite their debt amount, their income is larger and ensures they will have the funding to pay off their new home loans. 

Contact Us

At Equity Mortgage, we work with a variety of clients with varying degrees of mortgage needs. We offer our clients alternative options to their current loan programs with our wide range of mortgage products and flexible lending practices. 

Experience fast, professional service for coronavirus mortgaging today and into the future. Contact us for more info or give us a call at 1-800-332-9221.

 


* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.