3 Ways to Get Mortgage-Approved With Student Loans

If you have student loans, getting approved for a mortgage can be difficult if you don’t know what steps to take first. The good news is that there are three primary ways to get mortgage-approved with student loans; the bad news is that the first two options aren’t always the best choice in the long run, and neither will allow you to use your entire loan amount toward your house purchase. Here’s what you need to know about each option so you can decide which approach works best for your situation.

3 Ways to Get Mortgage-Approved With Student Loans

1) Refinance your student loans

Pursue an FHA mortgage loan. This is the most common type of mortgage in the US and it will help you get the best rate on your home. Ask for a downpayment gift. If you have family members who are willing to help you with a portion of your home cost, they can do so by providing a down payment as a gift or by helping with closing costs. You'll need at least 3% cash as your own funds and have good credit in order to qualify for this option. Lower your student loan interest rate. If you have private student loans, explore refinancing them through one of the many companies that will refinance them and give you a lower interest rate. 

You could also partner up on the loan with someone else and share payments. Apply for a deferment or forbearance if you're struggling to keep up with payments, as these options allow you to pause your monthly payment obligations until when you're able to pay again. There are other creative ways to pursue homeownership while you deal with paying off your student debt, like partnering up on a home loan with someone else. Inquire about negotiating your terms with lenders - see what kind of deals they might offer you. And make sure to contact some different lenders before signing anything! 

In addition, be patient and realize there's no reason to feel like this process has to happen overnight. There's no wrong way to approach homeownership - so take your time and explore all possible options.

2) Get a cosigner

When you're looking for a mortgage, it's important to know what your options are. One option is to get a cosigner. When you apply for a loan with a cosigner, the lender will base the decision on both your and your partner's credit scores and income. That means you'll be more likely to get approved with this option than if you were just applying by yourself. Plus, it can help build good credit if the cosigner is someone who has been in the system for a while. So what are some other things that can help lower your chances of being denied? Paying off or reducing the amount of debt that you have before applying for a home loan can help. 

And remember, there are many benefits to paying down your student loans early, like getting the money back in cash after graduation. If you're applying for an FHA mortgage loan (which doesn't require a downpayment), be sure to ask for a downpayment gift from family members so that they can feel involved. Partner up on the loan with someone else who also needs one - as long as they have good credit - which can also help you qualify for one together. You might even consider applying for a deferment or forbearance plan if your payments are too high or too far away from where they should be and could work out better than having them hang over your head while trying to save up enough money to buy a house.

3) Increase your income

In addition to being mortgage-approved, it is important to increase your income. You can either ask for a downpayment gift or look into lowering your student loan interest rate. Paying down or reducing payments on your debt will help as well. Partnering up on the loan might be another option to lower the monthly payment on the mortgage and finally applying for a deferment or forbearance could buy you some time until you’re ready for homeownership. Pursue an FHA mortgage loan if you have a low credit score or are interested in refinancing with less upfront money out of pocket. Ask for a downpayment gift from family members or friends if that is possible. 

Lower your student loan interest rate by applying for a private consolidation plan. Pay down or reduce payments on your debt by applying for an affordable repayment plan. Partner up on the loan through marriage, joint accounts, co-signers, and joint property ownership. Apply for a deferment or forbearance if you want to keep paying off your loans but want to hold off buying a home until later on.