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You are here: Home / Home Buying / Can I Swing A Mortgage Payment and Student Loans at the Same Time

Can I Swing A Mortgage Payment and Student Loans at the Same Time

June 2, 2021 By Ralph Gates

Are your student loans squelching your dreams of home ownership? Do you wonder if you’ll ever be able to stop renting and have a place you can truly call yours? Or maybe you own a small house but your family needs a larger one.

How Student Loans Affect Qualifying for a Mortgage

A student loan is debt, and a mortgage lender needs to know how much you pay every month on your debt. In that sense it’s no different from a car loan or a credit card balance. The kicker is that student loans tend to be large. According to US News, about 65 percent of recent college graduates borrowed to get through, and their average student loan debt is over $30,000. Some owe less, but many owe more.

What Impacts Your Ability to Get a Loan

Your lender wants to be confident that you’ll be able to make your mortgage payments. Two of the main factors that determine that ability are your credit score and your debt-to-income ratio, or DTI.

Credit Score

You need to have an acceptable credit score to get a mortgage at all. There are lending programs where you can qualify without having a top-notch score. However, the higher you score, the better terms you can get. That means a lower down payment, a better interest rate, and possibly a lower monthly payment.

Your bank and some credit card issuers will tell you what your score is. If you’re wondering what makes up that number that’s so important to your borrowing ability, here are the components.

  •   Payment history. The best indicator of whether you’ll make future payments is whether you’ve made payments in the past. Late and missing payments hurt this part of the score.
  •   Used credit vs available credit. If you have a lot of cards that are “maxed out,” it damages your score.
  •   Credit mix. Different types of credit are mortgage, auto loans, student loans, credit cards. Lenders like to see that you successfully handle different types of debt.
  •   New credit. It can hurt your score if you’ve opened several accounts recently.
  •   Length of credit history. A long history of paying accounts helps.

Debt-to-Income Ratio

Your DTI answers the question, what percentage of your monthly earnings goes to pay debt? It doesn’t consider other expenses such as utility bills and groceries. It does include auto loans, credit card payments, your student loan and the mortgage payment you’ll be taking on. If you make $5,000 a month, before taxes and deductions, and your debt payments, including the mortgage, total $2,000, then your DTI is 40 percent.

The maximum qualifying DTI is around 43 percent. 36 percent or below is better and will get you better terms. Your monthly mortgage payment ought to be 28 percent of income or less.

How Can You Improve Your Chances To Qualify?

The best way to keep your credit score high is to consistently make all payments on time, including your student loan.

It’s good to calculate your expected DTI before you apply with a lender. If it’s too high, you might be able to modify your student loan and make a lower monthly payment. Just remember that will lengthen your loan and increase the total number of dollars you will pay over time.

Even with Student Loans, Consider Buying a Home

A student loan is debt, and like any other debt it can be managed. Home ownership is both personally and financially rewarding, and you should look into it even if you’re still paying off student loans. If you’re still not sure, talk to us here at Mid-America Mortgage. We can help you sort through the factors that go into a home purchase decision.

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Filed Under: Home Buying, Loan Types, loans

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Mid America Mortgage Services, Inc, NMLS #1142067
200 E Walnut St.
Columbia, MO 65203

Phone: (573) 875-1100

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"My wife and I have moved around quite a bit with my job so we have been through the process before, but we have never had anybody help us as much as Michelle West Mid America Mortgage Services, Inc did. We needed a loan for a new construction home and they were able to help us out with all of our needs and make us feel comfortable with what we were doing moving forward. They did a good job of walking us through the paperwork to make sure that we were pre-approved for a certain amount."

Jason

"My family owns Tiger Ice Company. My experience with Ralph at Mid America started with Tiger Ice because we needed to expand our facility. When we went in to talk to Ralph at Mid America, he pretty much was straight up with us and told us we needed to go back to the drawing board. We came back with new numbers and a new plan, and we built the facility and everything was fine. Our dream of that would not have been possible at all without Mid America Mortgage Services, Inc and Ralph. They don’t tell you what you want to hear, they tell you the truth and that's what we weren't getting from other banks."

Andy

"I knew Jeanie Byland for a long time. She made the process so easy. One of the things I probably appreciated the most was that she didn't want to spoil the excitement of closing on a new house by showing up on closing day finding out that we owe a lot more than we thought. They were upfront with that information right from the get-go, and that’s because it’s just like they say, ‘They wouldn’t put you in a loan that they would be comfortable taking themselves.’”

Jamie

"One of the main things that I loved about Michelle was she was so organized. She would meet us at any location she needed to, and to be honest she had the absolute lowest interest rate. They were always very transparent with fees so there were no surprises. Michelle was always super easy and we would always run in talk to her even it was for a few minutes. The best thing was the process was very, very smooth."

Chris and Jamie

"I have had mortgages since 2004 in Columbia and have gone through a couple of banks, but over the last several years, the last couple of houses have been with Mid America Mortgage Services, Inc. Michelle has told us many times, 'I am not going to put you in a situation I am not comfortable with you being in, regardless of what it means for our company'.

Heidi always has a smile on her face and when you walk through the door, they recognize you and say “Hi”. I definitely recommend anyone who is in the home buying, purchasing, refinancing, upgrading business to go to Mid America Mortgage Services, Inc, ask for Michelle because they are going to be the best person you can work with."

John

Michelle, I want to thank you for all of your efforts on the loan. I never knew how much information the needed! I appreciate your personal nature and ease of working together. Thank you for making this happen! :)

Amy

Selling our home of 17 years and building a new home was a very emotional time for our family. We were ready for the next adventure in our lives but knew there were numerous steps involved. The search for a mortgage officer was simple, Michelle was our choice. Her guidance and knowledge made the process as easy as possible. When we had questions, she was always there to give us an answer and discuss our options. The employees of Mid America Mortgage Services, Inc like Michelle will keep us returning for our mortgage needs.

Chad and Julee

"I’m a very loyal customer at Mid America Mortgage Services, Inc. I have an addiction to building houses and designing them, and they are always right there with me every step of the way helping me get the best loan product and the best rates whenever I am ready to build. They make sure you don’t get a loan that you can’t afford. The whole process was very smooth. I would recommend Mid America Mortgage Services, Inc to anyone because they are always there to teach you, help you, and make it easy for you every step of the way."

Kate

"They really explained the process to us very well and made us feel very comfortable, specifically Jeanie Byland. I have never asked a question that I felt dumb about. They really wanted to educate us and have been fantastic. The interest rates changed one day and they called me to say, ‘Hey we might ought to look into refinancing your loan’. I really felt like they had our best interest at heart."

Steve

"When we were 18 and 19 years old no one wanted to help us get started. But Michelle took us under her wing 6 years ago next month. There is a lot of people out there that could of taken advantage of us many of times because we had no idea what was going on. For Michelle to stand beside us and walk us through, and not let us get into something that could get us in a lot of trouble means the world. We thank Michelle and we are extremely blessed to be able to work with her and her team. I have never even thought about talking to another lender and will always be loyal to Mid America Mortgage Services, Inc."

Cody and Morgan


Phone: (573) 875-1100
200 E Walnut St, Columbia, MO 65203

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