How will they affect your experience? Do you have Federal student loans on an income-driven repayment plan? Do you know how your lender is going to handle your debt to income ratio? We’ve got some answers to your questions and some recommendations. This could make buying a house with student loans less intimidating.

1. BUYING A HOME WHEN YOU
HAVE STUDENT LOANS

2. KNOW WHAT’S GOING ON WITH YOUR STUDENT
LOANS
Sounds simple, but you’d be surprised how many people don’t know
precisely how much they owe and to whom. They don’t know what their
payment plan options are. You might be one of those people. Getting ready
to buy a home is a perfect excuse to get your loan situation together. This
might be a deciding factor in your ability to buy a property.
TALK TO A MORTGAGE LENDER
We assume you’re here because you need a mortgage. If you can pay all cash for your new
home, congratulations on your good fortune! Your home buying process is much more
straightforward. But for most people buying a home, a mortgage is necessary, so you need
a lender. This can be anyone from a local loan officer in town to an online mortgage
company located anywhere in the world. It’s a good idea to vet several potential lenders and
find the one that works well with you.

3. IF YOU QUALIFY AND NEED IT, GET ON AN
INCOME-DRIVEN REPAYMENT PLAN
Getting on an income-driven repayment plan for your federal student loans may help reduce
your debt-to-income ratio. Emphasis on “may.” The reason is that lenders who follow Fannie
Mae underwriting guidelines (i.e., most lenders) must use the payment amount that shows
up on your credit report. The catch is that your IDR payment may not show up on your credit
report. (See our post on credit reports, IBRs, and mortgages for a visual example.)
ONCE YOU’RE IN ESCROW, DON’T CHANGE YOUR
STUDENT LOANS — OR ANY OF YOUR OTHER
FINANCES
Your offer on a place got accepted? Thrilling, yes, but your journey in buying a
home is far from over. Your lender still has to actually give you the loan. Even if
you’re pre-approved, the lender must now go through their full underwriting process
to verify you as a truly qualified borrower.

4. You made it! Loan documents are signed, the contract is closed,
and you have the keys to your new home. It’s a great feeling,
but now you are embarking on a life as both a homeowner and
a student loan debtor. So now what?
Whether you’re on an IDR, a Standard payment plan, or some
other kind of repayment, if you are happy and stable with that
plan, you can just keep paying your loan like normal.
If you are on an IDR payment and continue to need it, make
sure you submit your yearly recertification of your income. If
you don’t re-submit your income, you will revert to the
Standard payment plan, which will drive up your monthly costs
and may compromise your ability to pay your mortgage.
After six months of owning your home, Fannie Mae also provides
guidelines for lenders to allow you to use your mortgage to pay
student loans. The option is a student loan cash-out refinance.
Similar to a regular cash-out refi, if your home has increased in
value and you meet their requirements, you can refinance your
mortgage for a larger loan. You can choose a new lender or the
same one, if possible. The lender takes the difference between
this new loan and your current loan, transforms it into cash, and
directly applies it to your student loans.
YOU’VE
SUCCESSFULLY
PURCHASED
YOUR HOME —
NOW WHAT?

5. ARTICLE SOURCE
IMAGE SOURCE:
https://thecollegeinvestor.com/20202/buying-a-
home-when-you-have-student-loans/
https://artesiantitle.com/