Add a car payment and a few credit cards, and monthly debt more than doubles to eight hundred dollars per month.
Assuming a monthly income of ,000 and a maxing out of the allowable debt-to-income ratio, a first-time home buyer with student loans can "afford" a home for around 0,000, assuming a low-downpayment FHA mortgage.
According to a study by American Student Assistance, 55% of student loan holders said their debt is causing them to put off homeownership.
And, despite the historically low levels of today's mortgage rates plus a wide array of low- and no-downpayment mortgages available to first-time buyers, student-loan-holding consumers are discouraged.
Down payment matters because the size of your down payment determines for which mortgage loans you might be eligible.
Verify your home buying eligibility (Feb 24th, 2018) Student loans affect your monthly budget which, in turn, affects your DTI.
Verify your home buying eligibility (Feb 24th, 2018) Your debt-to-income ratio is a percentage which shows the amount of your monthly income required to repay your debts. DTI is heavily influenced by where you live so residents of San Francisco, where rents are relatively high tend to exhibit higher ratios than residents of Kansas City, where rents are relatively low.
For example, if you earned ,000 per month and had a monthly debt obligation of ,000, your debt-to-income ratio would be 40%. In general, your DTI must be 43% or less in order to get mortgage-approved.
Many would-be buyers aren't even applying -- worried that their debts will make homeownership impossible.
The truth, though, is that homeownership and student debt aren't mutually-exclusive.