Mortgage Myth #29: “No, your student loans disqualify you.”

Myth:

“My student loans disqualify me from buying a home.”

Truth:

Not even close.

Having student debt doesn’t automatically knock you out of the running — what matters is how those loans are reported and how your lender calculates them in your debt-to-income (DTI) ratio. With the right approach, even large balances can fit within mortgage guidelines.

Why People Believe This:

For years, lenders used outdated rules.

Back then, if your student loans were deferred or in forbearance, lenders would still assume a high monthly payment — even if you weren’t actually making one.

Combine that with rising loan balances and clickbait headlines about “crushed homeownership dreams,” and it’s easy to see why buyers think their debt is a deal-breaker.

Detailed Breakdown:

Here’s the real story:

Every loan program treats student loans differently.

• Conventional (Fannie/Freddie): Uses the actual payment shown on your credit report — even $0 if you’re on an income-driven repayment (IDR) plan that reports $0. If a payment cannot be derived, then we must use a calculation-formula to estimate a payment.
• FHA: Counts either the reported payment or 0.5% of the balance if no payment is shown.
• VA: Often excludes student loans if they’ll stay in deferment for 12+ months.
• USDA: Uses the actual payment or 0.5% of the balance if none is shown.

That means a $100,000 loan balance could count as only $0 toward your DTI under certain guidelines in certain situations.

When structured correctly, buyers with six figures of student debt are still closing homes every week.

This is where working with a strategic lender — not just a loan officer — changes everything. We dig into your credit report line by line, identify the calculation method, and build your plan around what truly counts.

Real-World Example:

Emma, a 29-year-old teacher, had $85,000 in student loans and assumed she’d be renting for years.

Her IDR plan showed a $62 monthly payment, but the lender she first spoke with used 1% of her balance — $850 — and said she didn’t qualify.

When she came to us, we used the actual $62 payment allowed by FHA. That dropped her DTI by more than 10%, and she closed on her first condo within 45 days.

The Bottom Line:

Student loans don’t disqualify you — misunderstanding the guidelines does.

The key is knowing how your specific program views those payments and structuring your plan around that.

What to Do Next:

Contact Me me for a Real Affordability Plan — I’ll show you exactly how your student loans fit into the picture and what’s actually possible.

If contact seems pre-mature to you, feel free to follow-me on my social channels, which are all listed here.