The thing about having student loan debt messes up your chances in applying for mortgage is a myth. However, student loans can significantly affect any application in relation to finances since it can be considered as one of your debts.
In applying for a mortgage, what lenders consider is not how much your debt is but how much you earn. Although it is true that lenders examine your student loan debt, it is only one the debts you have. Aside from examining this, they would also consider your credit report and your total annual salary. Having debt total 40% less than the total amount of income is going to place you in a favorable position. What is important to note is that, your student loan will only affect your mortgage application so long as the payment for it uses up most of your income.
Debt spent on education is far from being a bad thing. It just goes to show that you are persistent enough to finish college and to get the job you are aspiring for. In any case, your student loans can only affect your credit so much. The large bulk of the lender’s decision in granting you mortgage still falls under your capacity to pay for both your loans and your mortgage.
Two other significant factors affect the lender’s decision. One is the amount of money you are willing to pay as down payment. As this will create lesser risks for them, they will be able to perceive you as a good bidder.
The other factor is your score on your credit. Your student loan can have a very slight effect on your credit score. Fortunately, student loan debts are perceived more positively as compared to debts on credit card. Student loans have lower interest rates than credit cards, and are thus easier to complete.
In reviewing your credit history, moneylenders would also check on your tardiness in paying for your debts. Paying your student loan and other expenses on time shows your responsibility in managing your debts. Therefore, it will give you higher chances of being granted a mortgage.
