Having a student loan can impact every financial decision in your life: it can feel onerous enough to make you feel like you are doing everything right, payment-wise, and still somehow be “not quite ready.” for other sizable financial decisions like buying a home. You have a steady job. You pay your loans on time. Your credit is decent. You have savings. Then you talk to a lender, and suddenly the conversation becomes a math problem where your student loan payment feels like the largest number on the page.
If you are in that boat, here is the encouraging truth: plenty of people buy homes with student loan debt every day. Student loans are common, with over 10% of U.S. citizens carrying some form of student debt. Lenders see them constantly. Having student loans does not disqualify you. What matters is how your loans affect your overall financial picture, and how different mortgage programs and lenders count that debt.
This guide covers the big concepts of the situation you need to understand, the levers you can realistically pull to help, and the steps that tend to help you get from “maybe later” to “actually, we can do this.”
Start With the Real Goal: Approval and a Payment You Can Live With
Most buyers focus on approval, but the smarter goal is approval and a monthly payment that still lets you live your life. Student loan debt fits into that same idea. You do not need to eliminate your loans before buying. You need to show you can comfortably handle your student loan obligation plus a mortgage payment at the same time.
That is why lenders fixate on your debt-to-income ratio, or DTI. The Consumer Financial Protection Bureau has a clear explainer of DTI and how it is used in lending decisions.
You do not need to memorize exact thresholds to benefit from this. You just need to know what DTI represents: how much of your gross monthly income is already committed to monthly debt payments.
Student loans matter here because they are often one of the largest recurring obligations a buyer has.
What Lenders Actually Count for Student Loans
Here is where the confusion usually lives. When lenders calculate DTI, they need a monthly student loan payment figure. If your loans are in active repayment, it is often straightforward: they use the payment shown on your credit report or verified through your servicer.
If your loans are deferred, in forbearance, or on an income-driven plan with a very low payment, the rules can vary by mortgage type and by the automated underwriting system the lender is using.
Conventional loans (Fannie Mae and Freddie Mac)
For conventional mortgages, lenders typically follow the guidance in the Fannie Mae Selling Guide and Freddie Mac Guide on how to treat monthly debt obligations and DTI. At a high level, the principle is simple: student loans must be included in your monthly debts, and the payment used must be a real monthly obligation, not a placeholder that ignores the debt.
Freddie Mac has explicitly updated guidance over time to ensure that student loans included in DTI reflect a payment amount greater than zero, even when the credit report may not show an active payment.
What this means for you: two buyers with the same student loan balance can look different to two different lenders, depending on how the payment is documented and how the lender’s system interprets it.
FHA loans
FHA loans are often friendlier to first-time buyers and buyers with moderate credit profiles, and FHA has specific policies for how lenders should calculate student loan payments for underwriting purposes.
HUD’s Mortgagee Letter 2021-13 outlines how FHA treats student loans, especially when loans are deferred or do not have a fully amortizing payment.
You will also see consumer-facing summaries that reflect the policy shift toward using actual payments when available, with a fallback method when the payment cannot be verified.
What this means for you: FHA is workable with student loans, but documentation matters. If your payment is low because you are on an income-driven repayment plan, you want that payment clearly documented.
VA loans
VA loans are a powerful option for eligible veterans and service members, and the VA has published guidance on student loan payment calculations when the payment is not clearly established.
A commonly referenced VA circular describes a method lenders can use to calculate a monthly payment for student loans based on the outstanding balance when needed, and also instructs lenders to use a higher documented payment if the credit report shows it.
What this means for you: VA underwriting is more holistic than many people expect, but student loans still count, and the monthly payment assumption used can affect your approval and purchasing power.
The Two “Big Levers” Buyers Actually Control
You cannot rewrite your entire financial life overnight. But most borrowers who buy with student loans win by using two levers that are realistic and legal, and that do not require perfect timing.
1) Improve what the monthly payment looks like, not just the balance
Your student loan balance can be large while your payment is manageable, especially under federal income-driven repayment plans. The mortgage decision is driven by monthly affordability, not your emotional reaction to the total number.
That is why many buyers explore whether their current repayment plan is the best fit before they apply for a mortgage. In some cases, moving from a standard repayment plan to an income-driven plan can materially lower the monthly obligation that appears in underwriting.
Read this one twice: This is not a blanket recommendation for everyone. Income-driven plans can extend repayment timelines. They can increase total interest over time. They can carry other tradeoffs. Make decisions that best suit your overall plan and financial picture.
But if your primary barrier to buying is monthly cash flow and DTI, it is a conversation worth having with your servicer or a qualified student loan professional. (If you are pursuing forgiveness programs like PSLF, those considerations matter even more.)
2) Reduce other monthly debts first, because they are often easier to change than student loans
For many buyers, student loans are fixed for now, but credit card minimums, auto loans, and small installment loans are more movable.
A realistic strategy that helps many borrowers is to focus on the debts with the biggest monthly payment impact per dollar paid down. Paying off a small loan can sometimes free up more monthly budget than making an extra payment toward a large student loan balance.
This is unglamorous, but it works.
What to Gather Before You Talk to Lenders
Most common frustrations along the “student loans plus mortgage” journey come from unclear documentation. If your student loan payment is not obviously documented, lenders may default to conservative assumptions. That can shrink what you qualify for.
Before you apply, gather:
- Your most recent student loan statement showing the required monthly payment
- Proof of your repayment plan (especially if you are on an income-driven plan)
- Documentation of any deferment or forbearance terms, if applicable
- Your credit report, so you can see what payment amounts are showing
For conventional loans, lenders are often following guide requirements around monthly debt obligations, which is why documentation is your friend.
The practical takeaway: do not assume the lender will “figure it out.” Help them. You want the underwriting model to use the most accurate monthly obligation possible.
Common Myths That Trip Up Buyers
“I have to pay off my student loans before I can buy.”
No. Many homeowners carry student loans. Lenders care about monthly affordability and credit behavior.
“My income is high, so it does not matter.”
High income helps, but large monthly obligations can still compress DTI.
“All lenders treat student loans the same way.”
They do not. Even within the same broad program category, different lenders may interpret documentation differently or apply overlays.
As much a pain as multiple conversations or applications can seem, this is one of the clearest reasons to shop around.
What If Your DTI Is Still Too High?
If the numbers do not work today, there are still realistic paths forward. The key is to avoid the two extremes: giving up entirely or forcing a purchase that makes your life miserable.
Here are options that tend to be realistic for real people:
- Adjust the price range or location slightly to reduce the future housing payment
- Increase your down payment over time to reduce monthly cost
- Pay down one or two targeted monthly obligations that impact DTI
- Consider whether a co-borrower truly makes sense (only if it aligns with real shared finances)
- Explore loan programs that may treat your profile more favorably, without chasing “too good to be true” offers
A balanced resource like Bankrate’s guide can help you understand how student loans interact with mortgage qualification at a consumer level without turning into a rulebook.
Private Student Loans, Briefly
Private student loans can behave differently in underwriting mostly because repayment terms and flexibility differ by lender. You generally cannot count on the same range of income-driven options that exist in the federal system.
For mortgage purposes, the main idea remains the same: the monthly payment matters. Document it clearly, avoid surprises, and keep other monthly obligations as clean as you reasonably can.
Buying a Home While Having Student Loans Can Still Be a Smart Move
There is a reason this goal remains popular even when student debt is common. Housing can stabilize your monthly cost in ways rent often does not. It can give you control over your living situation. It can let you build equity over time.
And for many people, the emotional payoff matters too. Feeling settled, having a space that is yours, building a sense of home.
The key is not pretending student loans are irrelevant. It is understanding them as one component of your overall financial picture, then making a plan that respects your real-life budget.
The Most Important Advice: Get More Than One Mortgage Opinion
Because student loan treatment can vary by loan type and by lender, it is always wise to speak with more than one mortgage professional.
Two lenders might offer the same interest rate but interpret your student loan documentation differently. One might default to a conservative assumed payment while another may accept verified documentation that reflects your actual obligation. That difference can change what you qualify for and how confident you feel moving forward. If you are near the border of affordability, that second opinion is not just helpful. It is essential.
So here is the simplest closing guidance that aligns with almost every scenario:
Speak with more than one mortgage professional to understand your best options.
