Student loans effecting a mortgage application?

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I have 33,000 in student loan debt and the payments come to 350/month. That’s the only debt I have. If I’m making 40,000 a year for the past 2 years, will this look badly when I apply for a mortgage? I have never been late, nor have I ever missed a payment.

  1. Reply
    May 4, 2011 at 4:30 am

    Sounds ok, but any more large debt would hurt, as mortgages hard to come by unless the “bailout” loosens up lending.

    I actually think two credit cards with small balances showing never missed any payments and if you pay bal at end of month would help.

    You want to show some history, of good paying, not just one loan.

    I don’t think you will qualify for a large mortgage, however, and again providing things loosen up.

  2. Reply
    Lilith's Daughter
    May 4, 2011 at 4:47 am

    Your scenario sounds good. You will also have to show you have enough cash to pay for closing costs, usually between $ 3000 and $ 5000 dollars. Your lender can help you with the details. Banks typically charge less fees and mortgage brokers typically have better rates.
    Your monthly housing allowance should not exceed 28% of your total monthly income.

    Your total monthly obligations (monthly housing allowance plus any other long-term obligations) may not exceed 36% of your monthly income.

    Here is a calculator to help you figure out what you can afford.

  3. Reply
    oliver k
    May 4, 2011 at 5:17 am

    Having student loans doesn’t necessarily mean it will look bad. Banks and lending institutions often look at the overall picture. One thing that they will consider is your ability to make ontime payments. If having credit card debt, student loans, a car note, etc, mean that most of your income is spent before you pay your mortgage, then yes, it will negatively affect your application. They may either reject you, or approve you for a lower amount.

    If you can prove that you can make payments on all of your debts and the mortgage as well, without having to struggle, then you shouldnt have to worry that much about your student loans affecting you.

    I hope this helps.

  4. Reply
    May 4, 2011 at 5:56 am

    Two ways your student loans are a factor…number one is if you were behind or had a default.

    The other is the Mortgage Lender will look at your Debt to Income ratio. So your payments will be factored into how much money you have going out every month compared to how much you have coming in.

    So if you pay extra…if your monthly amount due is $ 100 and you pay $ 200…only put the amount due on your loan Application. Otherwise you will take away from you Debt to Income ratio and it could disqualify you.

    Talk to a Mortgage broker, they will tell you how best to get yourself ready.

  5. Reply
    May 4, 2011 at 6:22 am

    Student loans, like any debt, effect your debt to income ratio. It doesn’t “look badly”, but it will effect the amount you are going to be approved to borrow. Ultimately, the amount you qualify for will depend on your credit score, your employment history , debt load and your down payment as the major factors.

  6. Reply
    May 4, 2011 at 7:00 am

    I’ve just applied for a mortgage with my only debt being a student loan and have been told it shouldn’t be a problem.

    I think you just have to shop around really.

    Make sure you can put a decent deposit – we were advised to put up at least 20 per cent and we went for 25.

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