Student Loan Changes: Could They Impacting Your Homebuying Plans? 🏡 Let’s Talk!

How to Get a Mortgage When You Have Student Loans

If you have student loans and are thinking about buying a home, you might be wondering how your student debt could affect your ability to qualify for a mortgage. The good news is that it’s absolutely possible to get a mortgage with student loans. However, there are some important factors to keep in mind when applying for a loan, especially now that late payments on student loans are showing up on credit reports.

Update: Student Loan Late Payments Now Impacting Credit Scores

What Happened?

During the COVID-19 pandemic, federal student loans were put on hold, meaning no payments were required, and late payments weren’t reported to credit bureaus. This relief officially ended in October 2023. However, the Biden administration introduced an “on-ramp” period to help borrowers transition, which prevented late payments from affecting credit scores until September 2024.

That grace period has now ended. As of January 2025, late payments on federal student loans are officially being reported—retroactively. Nearly 10 million borrowers who missed payments are now seeing 90-day lates hit their credit reports, which has caused credit score drops of 50 to 250 points.

How Does This Affect You?

If you’ve recently checked your credit score and noticed a drop, this could be why. A lower credit score can impact:

• Mortgage Pre-Approval – Late payments on federal student loans can make it harder to get approved for a loan.

• Interest Rates – A lower score may lead to higher interest rates on home loans, car loans, and credit cards.

• Loan Approvals – Mortgage lenders may deny applications if there’s a recent late payment on a federal student loan.

What Can You Do?

If you're worried about how recent changes to student loan reporting may impact your ability to get approved for a mortgage, here are some steps you can take:

• Check Your Credit Report
  If you have student loans, it’s crucial to review your credit report to see if late payments have been reported. If you’ve missed payments, you might see a significant drop in your score, which could impact your loan options. You can check your credit report for free at AnnualCreditReport.com.

• Check Your Student Loan Status
  It’s important to stay on top of your student loan status and make sure all information is up to date. You can check your federal student loan status and payment history by visiting StudentAid.gov. This will help you identify any missed payments that may be impacting your credit score.

• Get Ahead of the Issue
  If you plan to buy a home soon, it’s important to understand how these late payments may affect your mortgage approval. I’m here to help you navigate this and explore all your options so you can still get the loan you need.

• Strategic Credit Guidance
  If your score has taken a hit due to late payments, I can connect you with trusted professionals who can help you rebuild your credit profile and improve your score.

Understanding the Impact of Student Loans on Your Mortgage Application

Now that we know student loan late payments can impact your credit, let’s look at how student loans affect your ability to buy a home overall. When applying for a mortgage, lenders focus on your Debt-to-Income Ratio (DTI)—the percentage of your income that goes toward debt payments. Student loans contribute to your DTI, so the more debt you have, the higher your ratio may be. A high DTI can make qualifying for a loan more challenging, but it’s not the only factor. Lenders also consider your credit score, savings, and down payment when determining approval.

How to Improve Your Chances of Getting Approved for a Mortgage with Student Loans

If you have student loans and want to improve your chances of being approved for a mortgage, here are some strategies to consider:

• Switch to an Income-Driven Repayment (IDR) Plan
  If you’re struggling with your student loan payments, consider switching to an income-driven repayment plan. This can help lower your monthly payments and reduce your DTI ratio, making it easier for you to qualify for a mortgage. Be sure to make the switch at least a year before applying for a mortgage, as this gives your lender time to consider the lower monthly payments when assessing your eligibility.

• Add a Co-Borrower
  If possible, adding a co-borrower with little to no debt and a high credit score can help lower your DTI ratio and increase your chances of approval. The co-borrower’s income will be factored in, which can make a significant difference in your ability to qualify.

• Consider a More Affordable Property
  If your student loans are pushing your budget, consider looking for a less expensive home. Expanding your search to more affordable areas or homes within your price range can make it easier to qualify for a mortgage, even with existing student debt.

• Wait and Improve Your Financial Situation
  If you’re not in a rush to buy a home, waiting could be your best option. Use the time to save for a larger down payment, reduce other debt, and allow any negative information on your credit report—such as late payments on student loans—to age off. This can improve your credit score and increase your chances of mortgage approval in the future.

How I Can Help You Navigate the Process

If you have student loans and are considering buying a home, I am here to help. Navigating the mortgage process with student debt can be tricky, but I will go above and beyond to take care of you like family. I am committed to ensuring that we set you up for success, answering any questions you have and offering guidance along the way.

Don’t hesitate to reach out if you need advice or assistance with your mortgage application. Together, we’ll make sure you’re on the right path to homeownership.