Key insights
- Many first-time homebuyers have student loan debt when purchasing a house.
- When buying a home, your debt-to-income ratio is more important than the total amount you owe.
- A variety of mortgage options exist for homebuyers with student loan debt.
If you’re ready to plant roots in a community or your dream home is on the market, student loans don’t have to hold you back. Here’s how to move forward and responsibly purchase a home, even with existing debt.
I want to buy a house, but I have debt
If you’re wondering whether you can own a home despite debt, the answer is yes — with some careful planning.
According to the 2025 Profile of Buyers and Sellers report from the National Association of REALTORS®, 36% of buyers said that student loan debt made it difficult to save for a down payment. If you have student loan debt, you may want to take a closer look at your finances before buying.
Homebuyers spend a median of four years paying down debt before they purchase a property. During this time, potential buyers also save up for two major home-related costs:
- Down payment
- Monthly mortgage payments
Down payment
One of the first costs associated with buying a home is the down payment, which is the amount paid upfront toward the total price of the home. Down payments vary widely and can range up to 20% or more of the home’s sale price, depending on the loan program and lender requirements.
Because this payment is made as a lump sum, some buyers find saving for a down payment challenging. Of the homebuyers who reported difficulties saving for a down payment, 36% said that student loan debt delayed their ability to save.
Monthly mortgage payments
After you make a down payment and purchase your home, you’ll begin making monthly mortgage payments. When determining how much you can afford when buying a home, you’ll want to review your debt-to-income ratio.
Why debt-to-income ratio matters
If your goal is to own a house but you have student loan debt, you’re not alone. Nearly 25% of all homeowners and 37% of first-time buyers are making mortgage payments while also paying off student loans.
One of the most important factors lenders consider is your debt-to-income ratio. This is the percentage of your monthly income that goes toward paying debts.
Lenders typically include the following when calculating your debt-to-income ratio:
- Student loan payments
- Credit card payments
- Housing costs
- Car loans
- Child support
- Other standard monthly bills
If possible, you can improve your debt-to-income ratio by:
- Minimizing unnecessary expenses
- Paying down credit card debt
- Increasing your monthly debt payments
Learn how to calculate your debt-to-income ratio
How to get a home mortgage — even with student loan debt
If student loan debt contributes to your debt-to-income ratio, you can still apply for a mortgage. Here are three common mortgage options:
FHA loans
FHA loans are insured by the Federal Housing Administration and are designed to support first-time buyers, buyers with lower credit scores, or those with smaller down payments.
Mortgage gift funds
Close family or friends may contribute to your down payment through mortgage gift funds. Be sure to properly document the gift so it meets lender requirements.
Down payment assistance programs
Down payment assistance programs may help with down payments and closing costs. Eligibility may depend on:
- Income
- Assets
- Credit
- Occupancy
- Location
- Availability
- Lender participation
Explore available assistance programs in Minnesota and Wisconsin and confirm eligibility with your mortgage consultant.
Next steps to buy a home
Don’t let student loans hold you back from purchasing your dream home.
Reach out to Edina Realty or one of our agents to move forward with your home search and purchase.