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One of the most exciting things about becoming a college graduate is entering the real world. Grads get to apply for the job they’ve worked so hard to obtain an education for, and they get to start their adult lives. Much of this involves finding a home and becoming a homeowner. It’s the American dream, after all. The problem is most college grads leave college approximately $35,000 in student loan debt. The national student loan debt average is astounding, and it’s not getting any better. In fact, many students live with far more debt than this, and many of them face financial struggles even with a degree and a good paycheck. It leaves grads wondering if buying a home with student loan debt to their name is the best solution. Is it the right time to buy a house?

Consider the Implications

There is no right or wrong answer for graduates looking for advice on this topic. Should you make it your goal to buy a home with student loan debt? It depends on your personal situation. Are you able to pay for a house and your debt at the same time without putting yourself into financial trouble? Are you comfortable with it? Is it something you can afford? There are factors you must consider for yourself that no one else can help you with. The best anyone can do is provide you with the facts and considerations needed to make a decision of this magnitude.

Debt-to-Income Ratio

Perhaps the biggest factor in deciding whether or not a home is affordable is your debt-to-income ratio. This plays a large factor in determining the type of mortgage you are offered and the home you can afford. If you owe a lot and don’t want to settle on a smaller home with an expensive mortgage, you might wait to buy a home. By paying off your loans as quickly as possible, you open up your finances to a larger home, a smaller interest rate, and more possibilities. It’s a personal decision.

Do You Have A Down Payment?

Another factor is what you can afford to put down. You can buy more house and have a smaller mortgage when you put down at least 20% of the home’s value, but not everyone can afford to do that. It’s not exactly easy to save for a home when you’re paying student loan debt, so you might consider an alternative mortgage option.

These are backed by the federal government, and they offer assistance to those who want to buy a home without making a down payment. There are even options for those who can make only a small down payment. It’s up to you what you are able to afford, and it’s something you might consider your own personal decision. Not utilizing the benefits of a down payment means you’ll finance more than 80% of the value of your home. That requires Private Mortgage Insurance. It’s expensive, and it’s a payment that goes right into your mortgage payment. It’s not cheap, which means you’re once again limited to what you can buy.

Pay Off Debts

The best choice for most college grads is to pay off some of that debt first. Make it your priority to pay off your student loans as much as possible, and then focus on buying a home. Can you live with you parents for a year or two while you pay off those loans? It’s something you might not want to do, but it’s going to pay off in the long run. Try it out and see if it works. The less debt you have, the more options open up to you when it’s time to buy your home.

Buying a home is a commitment that’s not inexpensive. Be sure you are in a financial place where you can afford to pay for it, to afford it, and to keep it. Don’t rush buying a home simply because it’s the next step after college graduation. Take your time and do what’s right for you and your financial situation. It’s what works for you rather than what works for everyone else who graduates with student loan debt.