Home Loans For College Students: A Guide To Student Loans and Mortgages

Apr 3, 2024

9-minute read

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Are you a college student who is interested in purchasing a home? You may be dealing with looming student loan debt while working part-time or not at all, wondering if it’s even a possibility to own a home in your current situation. Luckily, it’s still possible to own a home even as a current college student. All you have to do is qualify for certain mortgage programs available at the state and national level.

As you read on, you’ll learn about the programs designed for borrowers like you, as well as how to successfully qualify for a mortgage once the student loan payments kick in.

Best Programs For Buying A House As A Student

If you want to buy a house as a current student or a former student who’s dealing with student loans, consider the programs available to you based on your debt-to-income (DTI) ratio, credit score and funds available for a down payment.

You may not qualify for a conventional loan if you have a DTI ratio higher than 50%. A conventional loan is a mortgage that follows guidelines set by Fannie Mae and Freddie Mac, government-sponsored agencies which standardize mortgage lending in the U.S.

However, you may still be able to buy a home with a government-backed loan. These loans are insured by the federal government, making them less risky against a loss from a default. This allows mortgage lenders to issue loans to borrowers with lower DTI ratios.

Let’s take a look at some programs available that may make it easier to qualify for a home loan as a college student.

FHA Loan

FHA loans are backed by the Federal Housing Administration and have lower requirements for loan approval. Some of the requirements include:

  • DTI ratio: FHA loans require a maximum DTI ratio of 57% in many cases.
  • Credit score: You’ll need a credit score of at least 580 to qualify for an FHA loan.

Additionally, with an FHA loan, you may be able to have 2 years of your higher education considered as employment history to help you qualify.

VA Loan

If you’ve served in the armed forces or National Guard, you may qualify for a VA loan from the Department of Veterans Affairs (VA). Some of the requirements include:

  • DTI ratio: You can buy a home with a DTI ratio of up to 60% with a VA loan.
  • Credit score: You’ll need a credit score of at least 580 to qualify for a VA loan.

Before you apply for a VA home loan, make sure you meet service requirements.

Fannie Mae Loan Solutions

Fannie Mae also has a variety of policies in place to assist borrowers who have student debt but want to buy a home. These opportunities include:

  • Student Loan Cash-Out Refinance: Homeowners are offered flexibility to pay off high interest rate student debt while potentially refinancing to a lower interest rate on their mortgage.
  • Debt Paid By Others: In some instances, it may be easier for borrowers to qualify for a home loan if their non-mortgage debt, including credit cards, auto loans and student loans paid by someone else are excluded from their DTI ratio.
  • Student Debt Payment Calculation In some cases, l