Financial Education

August 19, 2019

Students are graduating with a mountain of student loan debt — $28,650 on average, according to the Institute for College Access and Success. If your student loan debt looks anything like the national average, it can feel like a dark cloud hanging over your ability to buy a home. But student debt doesn’t need to stand in your way. Here are some tips to help you on your path to homeownership:

Start with your credit score

Request a credit report at and also check your FICO® score. A low credit score and a credit report with missed payments or a lot of debt can make it difficult to qualify for a mortgage. You’ll want a FICO score of at least 620, as most lenders require a minimum score of anywhere from 620 to 700.

Keep a low credit utilization

Check your credit limits from your credit cards and lines of credit. If you have a limit up to $10,000 and you’ve charged about $4,000, then your credit utilization is about 40%. However, lenders like to see this number below 30%. Spending less or making payments multiple times a month can help lower your utilization.

Lower your debt-to-income ratio

Lenders look at debt-to-income ratio (DTI) to see if you have enough income to pay for both your living expenses and debts. Most lenders look for a DTI of 36% or less when approving mortgages. To lower your DTI, you’ll either need to earn more money or pay off debt.

Refinance student loans

Tackle the problem at its source by looking at refinancing options for your student loans. You may be able to reduce your monthly payment or lower your interest rate, freeing up money to spend on a mortgage. However, be sure you do this at least six months to a year before applying for a mortgage. Refinancing any loan generally results in a hit to your credit score.

Get preapproved before searching for homes

Getting preapproved for a mortgage allows you to shop with confidence and focus on a price range of homes you can afford. It also gives you an idea of what your monthly mortgage payments would be in different scenarios and how much money you’ll need for a down payment.

Get help with your down payment

Saving for a down payment can be a significant hurdle, especially when you’re making payments on student loans and other debts. Down payment assistance is available through a number of programs for those who qualify. Also keep in mind that your down payment can come from a variety of sources, including gifts from family members.

Make it happen

Student loan debt doesn’t need to be a barrier to homeownership. Make your dreams a reality with guidance from our mortgage experts. Contact a member of our mortgage team today!


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