Is it better to pay down our loans or put back money for a down payment on a house?

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Husband: multiple student loans, most were co signed by his parents, he has a job that pays about 41,000 after taxes, and is in the military. (In august he gets a raise to 51,000 after taxes) Approx credit score of 650
Me: I have far fewer student loans, all under just my name. Stay at home, take on line classes. Approx credit score 720. One credit card limit of 1000, pay it off to zero balance every month.
Together: Have one loan for a car
Total in loans: approx 39,000
-is this a reasonable spot to be in, the loans were for two 4 year college educations, and 2 cars, we’re 23, just 1 1/2 years out of college.
-Is it wiser for me to pay off those loans as much as I can not putting back much money into savings, or should I concentrate more on saving the money for a down payment?
-We don’t plan on buying a house for about 1 1/2 more years, but with my current stats, would we be likley to be approved for a mortgage?
-Also we do currently have saved Approx 5,000 for that down payment.

Any advice to get us on the right path now would be greatly appreciated.

2 Comments
  1. Reply
    Sharon T
    May 3, 2011 at 6:31 am

    I’d be inclined to hit the highest rate loans. If equal, I’d get rid of the consumer debt first. You could also split the money between loan repayment and down payment. Since you will qualify for a VA loan, down payment isn’t as important as for other people.

  2. Reply
    Howard L
    May 3, 2011 at 7:07 am

    It depends on the interest rates as to which loans to pay off and how much to put down on a house. I suspect you will have a very difficult time getting a mortgage with less than 20% down having a debt equaling 80% of a full years salary even with a 720 credit score. I’m not saying impossible just difficult. I’d suggest you contact a couple of mortgage brokers and see what they say you’ll need. Local markets are sometimes very different than national averages, and being a veteran helps.

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