Can You Buy a House with Student Loans 2026? Yes! Complete Guide
YES! You CAN buy a house with student loans! 83% of first-time buyers have student debt (NAR 2026). Key fact: Student loans count in DTI (debt-to-income ratio) but DON'T disqualify you. How it works: $50K student loans = $300/month payment. $80K income = can afford $2,700/month total debt (45% DTI). Strategies: (1) Income-driven repayment (lower payment = lower DTI), (2) Deferment (lender counts 0.5%-1% of balance), (3) Pay down debt before applying. FHA allows 57% DTI (easier with student loans). Get pre-approved with student loans. Related: Buy with 620 credit guide.
🎓 Student Loans + Mortgage Example:
Your Situation: $50,000 student loans, $80,000 income
Student Loan Payment: $300/month (income-driven plan)
Max DTI (45%): $3,000/month total debt allowed
Available for Mortgage: $2,700/month ($3,000 - $300 student loan)
Home You Can Afford: $350K-$400K!
⏰ Student loans DON'T stop you from buying!
How Student Loans Affect Your Mortgage (2026)
📊 Student Loans Count in DTI Calculation:
DTI (Debt-to-Income Ratio) = All Monthly Debts ÷ Gross Monthly Income. Lenders use DTI to determine how much mortgage you can afford. Student loans are included in "All Monthly Debts."
DTI Formula:
Monthly Debts: Student loans + car loan + credit cards + new mortgage
Gross Income: Before-tax monthly income
DTI Limit: 45% conventional, 57% FHA
Example: $1,000 debts ÷ $5,000 income = 20% DTI ✅
💡 Good News:
Student loans DON'T disqualify you! They just reduce how much mortgage you can afford. Lower your student loan payment (income-driven plan) = afford bigger mortgage!
🎯 Ready to Buy with Student Loans?
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How Lenders Calculate Student Loan Payment
| Loan Status | How Lender Counts It | Example |
|---|---|---|
| Active Repayment | Actual monthly payment from credit report | $300/month payment = $300 in DTI |
| Income-Driven Plan | Documented payment from servicer | $150/month IBR = $150 in DTI ✅ |
| Deferment | 0.5%-1% of balance OR $0 if <12 months left | $50K × 1% = $500/month in DTI |
| Forbearance | 0.5%-1% of balance | $50K × 1% = $500/month in DTI |
| $0 Payment (IBR) | $0 if documented OR 0.5%-1% of balance | Need proof of $0 payment from servicer |
💡 Pro Tip:
Switch to income-driven repayment BEFORE applying! Example: Standard plan = $500/month. Income-driven plan = $150/month. Lower payment = afford $100K+ more house!
5 Strategies to Buy a House with Student Loans
Strategy #1: Switch to Income-Driven Repayment
Best for: High student loan balances ($50K+), lower income.
How It Works:
Standard Plan: $50K loans = $500/month (10-year)
Income-Driven Plan: $50K loans = $150-$300/month (based on income)
DTI Savings: $200-$350/month = afford $50K-$100K more house!
Action: Contact loan servicer, apply for IBR/PAYE/REPAYE. Takes 2-4 weeks. Do BEFORE mortgage application!
Strategy #2: Pay Down Student Debt Before Applying
Best for: Small balances ($5K-$20K), have savings.
Example:
Before: $15K student loans = $150/month
Pay Off: Use $15K savings to eliminate debt
After: $0 student loan payment = DTI drops 3-5%
Result: Afford $30K-$50K more house!
Caution: Don't drain ALL savings! Keep 3-6 months emergency fund + down payment + closing costs.
Strategy #3: Use FHA Loan (57% DTI Allowed)
Best for: High DTI (45%+), student loans pushing you over conventional limit.
FHA vs Conventional:
Conventional: 45% DTI max
FHA: 57% DTI max (12% more debt allowed!)
Example: $5,000 income × 57% = $2,850 total debt allowed
vs Conventional: $5,000 × 45% = $2,250 total debt
Trade-off: FHA requires PMI (0.55%-0.85% annually). But worth it if you can't qualify conventional!
Strategy #4: Increase Your Income (Side Hustle, Raise)
Best for: 6-12 months before buying, can increase income.
Income Boost Strategies:
- Side Hustle: +$1,000/month = afford $200K+ more house
- Raise/Promotion: +$10K/year = +$833/month income
- Part-Time Job: +$500/month (need 2 years history)
- Rental Income: Rent room = +$500-$1,000/month
Note: Lenders need 2 years history for side income. W-2 raise = immediate!
Strategy #5: Get Student Loan Forgiveness Documentation
Best for: Public service workers, teachers (PSLF eligible).
How It Works:
Situation: 8 years into PSLF (Public Service Loan Forgiveness)
Remaining: 2 years until forgiveness
Lender Treatment: May exclude from DTI if <12 months left
Documentation: PSLF certification form from employer
Benefit: $50K student loans = $0 in DTI if forgiveness imminent!
⏰ Get Pre-Approved with Student Loans!
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Real Example: Buying with $60K Student Loans
Scenario: First-Time Buyer with Student Debt
Your Situation:
Income: $85,000/year ($7,083/month gross)
Student Loans: $60,000 balance
Car Loan: $350/month
Credit Cards: $100/month minimum
Credit Score: 720
❌ Standard Repayment Plan:
Student Loan Payment: $600/month
Total Existing Debt: $1,050/month
Max DTI (45%): $3,187/month
Available for Mortgage: $2,137/month
Home You Can Afford: $300K
✅ Income-Driven Repayment:
Student Loan Payment: $250/month
Total Existing Debt: $700/month
Max DTI (45%): $3,187/month
Available for Mortgage: $2,487/month
Home You Can Afford: $375K!
💰 Result:
Switching to income-driven repayment = afford $75K more house! Same student loans, same income, just lower monthly payment. This is why 83% of first-time buyers with student debt CAN buy!
Student Loan FAQs (2026)
Q: Do I need to pay off student loans before buying?
A: NO! 83% of first-time buyers have student debt. You DON'T need to pay them off. Just keep DTI under 45% (conventional) or 57% (FHA).
Q: What if my student loans are in deferment?
A: Lender counts 0.5%-1% of balance as monthly payment. Example: $50K loans = $500/month in DTI. If deferment ends in <12 months, may count $0.
Q: Can I use student loan refund for down payment?
A: NO! Lenders won't allow borrowed money for down payment. Must be YOUR money (savings, gift from family, 401k loan).
Q: Does student loan forgiveness help me qualify?
A: YES! If forgiveness is <12 months away (PSLF, teacher forgiveness), lender may exclude from DTI. Need documentation from servicer.