Are student loans in deferment counted against you when appying for mortgage?

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I’m still in college, graduating in 3 months, have a job secured, and want to get a mortgage and buy a house in the new city BEFORE graduating/moving for the new job. Since my undergraduate student loans have been in deferment for a long time (I’m in my 6th year of grad school)…do they count against me for affordability in mortgage approval? I have no other debt/ no credit card debts, etc.

I know that student loans can count against you in buying a house as they are a debt but I dont know if we use student loans as a source of income while in college if we can count that as monthly income. So, my hubby and I are both in school, we have taken out student loans to help substidize our income so that we can go to school full time and work Part-time. We would like to try to buy a home (townhouse etc) soon. is it possible to count our student loans as income as that is how we pay for rent right now?

  1. Reply
    January 25, 2011 at 2:15 pm

    I think the best thing for you to do is talk to a real estate agent or somebody from a mortgage company. they will have the best answer for you

  2. Reply
    January 25, 2011 at 2:33 pm

    My son just bought a house and his student loan in deferment did not change the income to debt ratio.

  3. Reply
    January 25, 2011 at 2:39 pm


    Yes, mortgage lenders will consider your students loans when evaluating your mortgage application. One of the factors in evaluating your qualification for the mortgage is your debt-to-income ratio.

    Think about it – it’s not your income that’s important – the lender wants to know how many monthly obligations you have OTHER than your mortgage.

    Your loans may be in deferment now, but they’re not staying in deferment forever. At some point, you have to make the monthly payment on those and on your mortgage, your real estate taxes, your insurance, etc. (Plus all of your other monthly expenses)

    I’m guessing – since you’ve been in graduate school for a while – that your loan debt is not insubstantial – so your monthly payments may represent a pretty decent sized financial obligation. Your mortgage lender will certainly want to take a look at that.

    Do student loans mean you won’t qualify? Of course not. If they did, few people in this country would be able to buy a place of their own until they’d been out of school for 10 or 15 years.

    But will your student loan balances and anticipated monthly payments be considered? Of course they will. Just like any other major monthly obligation that will compete with the mortgage and homeowner costs for the money in your paycheck.

    (Avoid the common mortgage lender’s suggestion to consolidate your student loans – it may make their numbers look nicer, but it’ll cost you an arm and a leg in extra loan payments.)

    Good luck – I hope this helped.

  4. Reply
    January 25, 2011 at 2:58 pm

    no you cannot count borrowed money as income. No bank will do that.

  5. Reply
    January 25, 2011 at 3:47 pm

    Never going to happen. That is debt not income.
    A lender would laugh.

  6. Reply
    January 25, 2011 at 4:18 pm

    as an alternative, visit your county recorder and see when their
    annual real estate tax delinquent sale is. YOU can get a house
    for taxes.

  7. Reply
    January 25, 2011 at 4:46 pm

    No you cannot
    This is in no way income
    It is a debt
    That would be like asking if you can count the cash advances you can take on your credit card as income.

  8. Reply
    Ed Atun
    January 25, 2011 at 5:35 pm

    No. The bank is looking for assets. A loan is not an asset. They want to see that you have a track record of saving money. If so, you will be able to pay the mortgage when you go thru a tough period.
    You could buy a home from an elderly person who owns it free and clear. You would not get a mortgage; you would make monthly payments to the previous owner. You get the deed. If you don’t pay, the house goes back to her..

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