 TITLE: How Does Student Loan Debt Affect Buying a Home? CONTENT: How Student Loans Affect Getting a Mortgage\n-------------------------------------------\nHaving a student loan, in itself, isn't a deal breaker when it comes to getting a mortgage. What lenders care about is how debt you currently have (including your student loan debt) might affect your ability to repay the mortgage.\nWhen you apply for a mortgage loan, your debt-to-income ratio (DTI) is one of the factors lenders consider. DTI compares the total amount of your recurring monthly debt with your total monthly income. To calculate your DTI, add up all of your recurring monthly debt (such as minimum credit card payments, car loan payments and, of course, student loan payments) and divide it by your gross monthly income (the amount you earn before taxes and other withholdings).\nSuppose new grad Maria has a monthly income of $3,500 and a total recurring monthly debt of $1,200. Her DTI is 34% ($1,200 divided by $3,500). In general, lenders want to see a DTI of 43% or less before approving you for a loan, and many lenders prefer a DTI below 36%.\nWhat happens if we add a monthly student loan payment of $393 to Maria's debt load? (This is the average student loan payment, according to the Federal Reserve.) Now Maria's recurring monthly debt is $1,593, increasing her DTI to 45%—too high to get a mortgage. More than half (52%) of non-homeowners in the NAR survey say their DTI is keeping them from qualifying for a mortgage. END