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 — you can, 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 these two home-related costs:

• Down payment
• Monthly mortgage payments

One of the first costs associated with buying a home is the down payment, which is the cost paid upfront toward the total price of the home. Down payments vary widely and can range up to 20% (or more) of the home sale price, depending on the loan program and lender requirements.

Because this payment is paid as a lump sum, some buyers find saving for a down payment to be challenging. Of the homebuyers who reported difficulties saving for a down payment, 36% said that student loan debt delayed their ability to save.

Keep in mind that after you make a down payment and purchase your house, you’ll have to begin sending in monthly mortgage payments as a homeowner. So when determining how much you can afford when buying a home, you’ll want to take a look at your debt-to-income ratio.

Why your debt-to-income ratio matters

If your goal is to own a house but you have student loan debt, know that nearly 25% of all homeowners and 37% of first-time buyers are making mortgage payments while also paying off their student debt. So, buying a home with debt is possible — and it can be done responsibly. One of the most important factors to consider is your debt-to-income ratio. Lenders often look at debt-to-income ratios when evaluating mortgage applications.

The percentage of your income that you pay to debt each month equals your debt-to-income ratio. This number, rather than the total amount of debt you owe, is what lenders will primarily pay attention to when determining your loan eligibility.

That’s because when lenders assess your debt-to-income ratio, they’re making sure that your potential housing costs and other financial responsibilities won’t cost you too much of your overall income.

Lenders typically take these factors into account when gauging your debt-to-income ratio:

• Student loan debt
• Credit card payments
• Housing costs
• Car loans
• Child support
• standard monthly bills

If possible, you’ll want to minimize your debt-to-income ratio by:

• Minimizing unnecessary expenses
• Paying down credit card debt
• Increasing your monthly payments toward your debt

How to get a home mortgage—even with student loan debt

If you have student loan debt contributing to your debt-to-income ratio, you can still apply for a mortgage. Here are three common mortgage options for buyers with student loan debt:

• FHA loans
• Mortgage gift funds
• Down payment assistance programs

1. FHA Loans
The Federal Housing Administration (FHA) insures loans that are designed to meet the needs of first-time homebuyers; these are called FHA Loans. This type of loan could be a smart decision for someone with a less-than-perfect credit score or for a buyer with a down payment budget under the 20% mark. For this reason, FHA loans are commonly referred to as “helper loans.”

2. Mortgage gift funds
Gift funds are another way for buyers to get help when applying for a mortgage. Close family or friends may offer to contribute to the down payment on your home through a mortgage gift fund. If you are fortunate enough to receive this type of assistance, be sure to go through the necessary steps to document the gift.

3. Down payment assistance programs
Down payment assistance may be another option to help homebuyers with down payments and closing costs on home purchases. These programs have specific qualification requirements depending on:

• Income
• Assets
• Credit
• Occupancy
• Location
• Availability
• Lender participation

Each down payment assistance program will have different eligibility requirements. Be sure to take a look at assistance programs in Minnesota and Wisconsin if you’re hoping to get extra support toward your home purchase. Keep in mind that not all lenders accept these programs. Check with your mortgage consultant to see what options are currently available.

Next steps to buy a home

Don’t let student loans hold you back from purchasing your dream home. Whether you want a space to raise a family or are ready to make monthly payments toward a home that you can call yours (instead of your landlord’s), it’s possible! Reach out and move forward with your home search and purchase.