Home Owner

Can I Buy a House When I'm Paying Off a Student Loan?

Here's a few things to consider if you are looking to buy a home while paying off student debt.

Are you really ready to buy a house?

Before you take a look at your finances to determine if you can afford this purchase, make sure this goal is in your best interest.

For example, have you considered which city or neighborhood you’d like to live in at this point in your life? College grads are likely just starting out in their career and might be better off with the flexibility that comes with renting. This way, if an employment opportunity requires a move, they’ll be free to accept it. 

Next, think about the financial ramifications of this purchase. When taking out a home loan, reflect on your budget and what it will look like after adding another monthly payment.

Consider these questions carefully before making your decision.

Getting started: Boost your credit

Once you’ve decided that you want to move forward with purchasing a home, you’ll want to start improving your credit. Your credit wellness is the primary factor that home lenders consider when deciding if you’re eligible for a mortgage. It also figures the rate they will offer you.

Here are some ways you can boost your credit score in the months leading up to your mortgage application:

  • Pay all your bills on time. Set up automatic payments to make it effortless.
  • Keep your credit utilization at less than 30 percent.
  • Pay your credit card bills in full, and before they’re due.
  • Don’t close old accounts or open new cards. You want your credit history to be lengthy, and both of these steps can significantly bring down your average.

How high is your debt-to-income?

Lots of young college graduates think it’s impossible to obtain a mortgage when carrying student loan debt. In fact, a 2018 Student Loan Hero survey found that 43% of college-educated Americans with student loans postponed buying a home because of their student debt.

Luckily, there is very little truth to this concern. As mentioned above, a student loan that is handled well should not be a deterrent to getting a mortgage. To make sure you’re managing your student debt responsibly, set up automatic monthly payments on your loan so you never miss a payment or a due date.

In addition, make an effort to pay your student loan back as quickly as possible so it doesn’t reflect badly on your debt-to-income (DTI) ratio. Since taking out a mortgage means accepting more debt, lenders are careful to check that you aren’t carrying too much other debt. Ideally, your total debt payments, including your mortgage, should account for less than 36% of your income.

If your DTI is on the high side, you may not be eligible for a mortgage just yet. Consider refinancing your student loan to a loan with lower interest rates so you can pay it off sooner and then apply for a mortgage when your DTI improves. You can also look for ways to increase your income to tilt your debt ratio in your favor.

If you’re carrying any other debt, such as credit card debt, you’ll want to pay it down as quickly as possible as well.

Determine how much house you can afford

Before you start shopping for a home, find out how much house you can actually afford. The best way to obtain this information is by applying for a preapproval from a home lender. This will tell you exactly how high you can go while showing sellers that you’re serious about buying.

If you won’t need your pre-approval just yet, but you’d like an idea of how much you’ll need to save for a down payment, you can use an online mortgage calculator to get your magic number.

Start saving for a down payment

Once you have your numbers worked out, you’ll need to save up for a down payment. Trim your budget in any way you can and look for side hustles to boost your income and make saving simple. Then, set up an automatic monthly transfer to your Listerhill Savings Account so your money can grow.

At this point, you may want to look into a local down-payment assistance program or a federal loan program, such as an FHA loan, which only requires a down payment of 3.5 percent. If you live in a rural area, you might qualify for a USDA loan, and if you’ve served in the military, you’re likely eligible for a VA loan.

If you're ready to check out buying a home, check out Listerhill's exceptional mortgage options. Our fantastic rates and hassle-free pre-approval process make a Listerhill home loan an excellent choice!

For a limited time, get no PMI* in addition to low rates and local service with as little as 3% down for your home loan. Learn more here. 

equal-housing-opportunity.png#asset:37198

  

default icon for Solution Finder Intro
What can we help you with?
default icon for Checking For Mature Members
What are you borrowing for?
default icon for Checking For Mature Members
Vehicle Options
default icon for Checking For Mature Members
Home Options
default icon for Carrolls
What are you saving for?
default icon for Carrolls
How old are your kids?
default icon for Cord
Which of these banking options are you interested in?
default icon for Cord
How old are you (or your child)?
default icon for Cord
How old are you?
default icon for Cord
What kind of account are you looking for?
search popup background

What are you looking for?

Common Links

Frequently Asked Questions

  • How do I redeem my Merchandise Rewards?

    The easiest way to redeem your Merchandise Rewards is to log into Listerhill’s Online Banking and click the “Get Info” link to the right of your credit card information. This will take you to our credit card servicing site within the same window. Select “Rewards” on the upper right side within the screen (below FICO Score) and on the next screen, click on the CURewards logo. This will automatically sign you in to be able to redeem your Merchandise Rewards points!

  • What are the benefits of becoming a SEG partner organization?

    1. Completely free program and zero liability to your company.

    2. Easy to implement – requires no additional staffing or resource allocation.

    3. Builds employee loyalty and helps your organization stand out in a competitive employment market.

    4. Encourages financially stable employees through free on-site financial workshops.

    5. Initial on-site employee orientation; re-orientations and free financial seminars available. Once signed up, our SEG partner organizations are offered a free 30-40 minute on-site orientation to educate employees about the benefits of belonging to the Listerhill Credit Union financial cooperative. This informative and helpful session gives your employees a chance to ask questions and learn about the many benefits, products and services that membership provides them. Once on board, we also offer [INSERT PROGRAM NAME HERE] partner organizations free Lunch n’ Learn seminars for employees. Topics include creating a budget, paying for college, debt management and how to buy a home.

    6. Credit union support at benefit fairs and open enrollment.

    7. Same-day account opening – we can immediately assist your employees who would like to open an account during our visit.

    8. Free informational materials – We provide all materials at no charge, including brochures and financial wellness educational workbooks

    9. Free participation in employee benefits fairs, new employee orientation meetings and other organizational events.

    10. No hassle partnership – we do all the work!

  • How do your employees benefit from being a SEG?

    1. Lifetime credit union membership

    2. Competitive rates on a wide range of savings products like:

    • Share Savings
    • Money Market
    • Certificates
    • IRAs
    • My Goal Savings
    • Explorer Rewards

    3. A wide range of loan products like:

    • Auto loans
    • Personal loans
    • Recreational loans

    4. Competitive loan and savings rates.

    5. 24/7 account access with Smart ATMs, Online and Mobile Banking, or by telephone with Automated Access. The choice is yours.

    6. eStatements

    7. Overdraft protection

    8. Up to 3 overdraft refunds per year on us.

    9. First box of checks free when you open your new checking account.

    10. Free Visa debit card with rewards or a UNA Keystone Debit Card to show your #lionpride and give back to the University.

    11. Checking accounts with no minimum balance required.

    12. Interest-earning checking accounts

    13. Free Online Banking with features like:

    • Free Online Bill Pay
    • PopMoney
    • Notify Me Alerts
    • Personal Finance Manager

    14. 24/7 Access to Smart ATMS with features like:

    • Make a deposit
    • Get exact change
    • Make loan payments
    • Speak with a real, local representative

    15. Access to 5,000 CO-OP Shared Branches nationwide for easy access to your money wherever you go.

    16. Visa Platinum Cash Back card with 1% cash back on everything you buy.

    17. Visa Platinum Merchandise Rewards

    18. A full-service mortgage lending department and your mortgage stays with Listerhill for the life of the loan.

    19. A full-service financial planning department that gives you personalized, local service.

    20. Access to financial wellness education courses and information.

  • How does the Maintenance Fee contribute to Listerhill's sustainability?

    In the past, we charged a $10 Relationship Fee to help cover the cost of servicing members' accounts. We felt we could serve you better by removing this fee and establishing a lower fee based on your investment in the cooperative. Encouraging our members to save and borrow with us is key to Listerhill's sustainability, plus it creates value that it ultimately returned back to our member owners (like you!)

  • How can I avoid the new Maintenance Fee?

    You can avoid the new $5 Maintenance Fee entirely when you meet just one of the following requirements:

    • You or someone in your household has had a current loan or mortgage within the last 12 months.   

    • You or someone in your household has an open credit card    

    • You or someone in your household has an aggregate average daily balance of $1,000 in your accounts  

    • You or someone in your household has a relationship with our Listerhill Financial Services department   

    • You have paid at least $125 in NSF, Transfer, or Courtesy Pay fees for the month   

    • You are under the age of 25   

    • Your account is less than 90 days old   

    • You have paid a Return Mail Fee or an Inactive Account Fee for the month