Buying a House With Student Loans of 50K, 100K, 200K or More

In this article: A closer look at how student loan debt affects homebuying, if it matters how much you owe, and what to do if you’re denied a mortgage due to student loan debt.

It’s no surprise to hear that student loans stand in the way of homeownership for millennials in 2025.

I mean…

• 35% of would-be homebuyers said student loans were their biggest hurdle to saving for a down payment.
• The average age of first-time homebuyers is now 36, compared to ages 28 to 33 in previous generations. 
• Home ownership has decreased by 1.8% for every $1,000 increase in student debt among college graduates under 35. 
• Between 2005 and 2014, student loan debt among 24- to 32-year-olds doubled while the rate of homeownership dropped 20%. 

While it’s abundantly clear that student debt is an obstacle, we still have to live.

Rents aren’t always significantly cheaper than buying a home nowadays, and buying a home comes with long-term stability that we crave as we reach more demanding stages of our careers and begin building families.

But buying a home is still possible with balances of 50K to 200K and beyond.

Table of Contents

1. Do student loans affect buying a house? 
   1. Front-end ratio
   2. Back-end ratio
   3. Federal vs. private: Does it make a difference?
   4. Should I buy a home while I still have student loan debt?
2. How much do you owe? Breakdown of homebuying challenges by balance
   1. $50K
   2. $100K
   3. $200K or more
3. What if you can’t get a mortgage because of student loans?

Do student loans affect buying a house? 

Qualifying for a mortgage with student loans can be more difficult, but it is possible. Student loans aren’t a particular cause of concern for most lenders and won’t disqualify you from getting approved for a mortgage.

However, student loans can pose problems if they cause you to have a high debt-to-income ratio (DTI). This ratio represents your debt relative to your income. Two types of DTI—front-end and back-end—must be below lender qualifying limits to get approved for a mortgage loan.

Type of DTI	What is it?	Do student loans affect it?
Front-end ratio	PITI / Monthly income	❌
Back-end ratio	Total debt obligations / Monthly income	✅

Front-end ratio

The front-end ratio compares your housing costs to your income. This includes your PITI: principal and interest payments on your mortgage, plus property taxes and insurance. Most lenders want this total aggregate cost of housing to be below 28% of your income.

Let’s look at an example.

Monthly housing payment (mortgage + taxes + insurance)	Gross income (pre-tax)	Front-end ratio
$1,925	$5,000	38.5%

If you earn $5,000 per month before taxes, divide $1,925/$5,000 to get a front-end ratio of 38.5%. This is too high, and your loan wouldn’t be considered affordable.

Your student loans don’t affect your front-end ratio. Only your housing costs and income do.

Back-end ratio

Student loans could affect your back-end ratio, however. This ratio compares your income with your total obligations, including PITI plus other monthly debt payments.

Most lenders want your back-end ratio to be below 36%. Even for FHA loans, which are guaranteed by the Federal Housing Administration, the maximum ratio is typically 43%.

Here’s an example:

Monthly housing payment (mortgage + taxes + insurance)	$1,000
Student loan payment	$400
Car payments	$200
Total	$1,600

If your gross monthly income is $5,000, your back-end ratio would be $1,600/$5,000 or 32%, so you could qualify for a mortgage. 

If your monthly student loan payments are high, this could affect your back-end ratio, and you might not be able to get a mortgage loan without lowering your debt payments or increasing your income first.

Federal vs. private: Does it make a difference?

Both private and federal student loans can impact your debt-to-income ratio. 

However, federal student loans are eligible for various repayment plans, so you may have an easier time reducing your federal student loan payments than your private ones to decrease your back-end DTI and improve your chances of qualifying for a mortgage.

Here’s a closer look at how your student loan debt can impact your back-end DTI and, therefore, your chances of qualifying for a mortgage, depending on your balance. 

Read More

How to lower student loan payments

Should I buy a home while I still have student loan debt?

Buying a home when you have student loan debt can make sense if you can afford both your monthly mortgage and student loan payments. 

Rather than waiting to pay off your student loans in full, you may benefit from starting to build equity, especially if you can snag a competitive mortgage rate. 

However, everyone’s situation is different, so you’ll have to consider how homeownership would fit in with your budget and other financial goals when making your decision.  

How much do you owe? Breakdown of homebuying challenges by balance

Buying a house with $50K in student loans

Let’s say you want to buy a home but owe $50,000 in student loans. Assuming a 5.5% interest rate, here’s how much you’d pay on your student loans on the standard 10-year plan: 

Total loan amount	Interest rate	Monthly payments on standard plan	Total interest costs
$50,000	5.5%	$543	$15,116

Now, let’s say that your other debt payments and proposed monthly housing costs with your new mortgage add up to $1,500. To keep your back-end DTI ratio at 36% or below, which is what mortgage lenders prefer, you’d need to earn a gross monthly income of at least $5,675. 

Buying a house with $100K student loans

Some borrowers owe three figures of student loan debt. Here’s what your costs would look like with a $100,000 student loan balance on the standard repayment plan: 

Total loan amount	Interest rate	Monthly payments on standard plan	Total interest costs
$100,000	5.5%	$1,085	$30,232

Assuming the same monthly payment obligations of $1,500 on top of your student loan payment, you’d need a gross monthly income of at least $7,181 to keep your back-end DTI at 36% or below 

Buying a house with $200K student loans

Now let’s say you owe twice that much. Here’s what you’d be paying on the standard plan if you owe $200,000 in student loans: 

Total loan amount	Interest rate	Monthly payments on standard plan	Total interest costs
$200,000	5.5%	$2,171	$60,463

Assuming the same additional monthly costs, you’d have to make at least $10,197 pre-tax for back-end DTI below 36%. 

If those numbers sound out of reach, you could also keep your back-end DTI down by reducing your monthly student loan payments. Two main ways to accomplish this are by signing up for income-driven repayment or refinancing your student loans. 

• An income-driven plan adjusts payments on your federal student loans to a percentage of your discretionary income. It also extends your loan terms to 20 or 25 years. 
• Refinancing, on the other hand, means replacing one or more of your student loans with a new loan from a private lender. You could pick longer repayment terms to get a lower monthly payment.

Note that refinancing federal loans turns them private, meaning they’d no longer be eligible for income-driven repayment or other federal benefits.

Buying a home has many advantages over renting. Your housing costs become more stable and you are insulated against rent increases. You can do what you want with your home, including renovations or starting a garden.

Mortgage principal payments are a form of savings, and assuming your home value increases, your wealth can rise. But there are disadvantages as well. Buying a home ties you to the area, and you will need stable income to pay your mortgage.

If you can’t afford your student loan payments, you may be able to go into forbearance or enter a payment plan, but if you don’t pay your mortgage, you may be forced into foreclosure and become homeless. While you may be able to sell your home again, you usually have to stay there for five to 10 years to ensure a profit and even then, it’s not guaranteed.

The other important thing to realize is that you are now your landlord, and you are responsible for home maintenance. If your water heater dies, you will need a robust emergency fund to make sure you can quickly replace it.

Improve your credit score

• Get your credit score up to at least 620: A 670+ score helps you access better interest rates and save money over the life of your mortgage.
• Pay off student loan debt to reduce credit utilization: Eliminating student loan balances reduces amounts owed, boosting your credit profile.
• Pay down credit card debt first: Credit cards often carry high interest rates and high utilization penalties, hurting your score more than other debts.

Read More

How to Improve Your Credit Score and Open Financial Doors: Short- and Long-Term Strategies

Lower your debt-to-income ratio (DTI)

• Make extra payments on student loans: This lowers your DTI, increases mortgage affordability, and speeds up your debt-free timeline.
• Get a raise, or take on a side hustle: More income reduces the proportion of your monthly payments tied up in debt.
• Refinance student loans: A lower interest rate or extended term can lower your DTI, though it may increase total interest paid.
• Pay off auto loans and other debts: Reducing your financial obligations makes it easier to qualify for a mortgage with a better rate, and these debts may be smaller and easier to tackle immediately compared to your student debt.

Read More

How to Pay Off Student Loans Fast | How to Refinance Student Loans With a Cosigner [2025’s Best Rates + Lenders]

Focus on down payment

• Increase your home down payment to at least 20%: A larger down payment reduces lender risk, helps you qualify more easily, and lowers monthly costs.
• Save for a 3%+ down payment if 20% isn’t realistic: Some lenders accept as little as 3%, but you’ll likely need to pay for private mortgage insurance.
• Use down payment assistance programs to help cover upfront costs: Many local, state, and nonprofit programs support first-time or low-income homebuyers.

Read More

11 Ways to Lower Your Mortgage Payment

Improve mortgage approval odds

• Buy a smaller, more affordable home: A modest home reduces your mortgage, taxes, and upkeep—freeing up cash and lowering financial strain.
• Get preapproved for a mortgage: Preapproval helps you understand your borrowing power and shows sellers you’re a serious buyer.
• Consider FHA, VA, or USDA loans for more flexible requirements: FHA loans allow 3.5% down with up to 43% DTI; VA/USDA loans offer 0% down with up to 41% DTI for eligible borrowers.

Read More

How to Get a Mortgage in 7 Steps

The best way to save for a home down payment is to put aside money with each paycheck into a high-yield savings account dedicated to your down payment. If you get some extra money, perhaps from a bonus at work or a tax refund, put that money into the account, too. You will be surprised how quickly it can add up.