Having student loan debt doesn’t deny your approval for a mortgage loan right off the bat, but it can definitely be one of the factors that can make or break your application.
According to The Wall Street Journal, out of almost 46,000 first-time home buyers seeking a mortgage loan, nearly 75 percent were approved. Of those approved, 27.3 percent had student debt, whereas of those denied, 26 percent had student debt. Just having student loans won’t kick you out of the ballpark though; it has more to do with the size of one’s debt and his or her income. According to Forbes, if a homebuyer pays only 3 percent of their income toward their student loan debt, then they can most likely have the money to afford a mortgage. If they are paying 43 percent of their income, though, they are at a higher risk of being denied.
Although this may seem like good news, don't forget that in 2012 the median annual earnings for young adults with a bachelor’s degree was $46,900, $30,000 for those with a high school degree or credential, and just $22,900 for those who had not completed high school. Compare this to the average for student loan debt, which can be as high as $59,600 per year for grad school. Four years of grad school could amount to almost a quarter of a million dollars in student loan debt, and with just $46,900 of income yearly. . .it's needless to say the student loan forgiveness plan is starting to look better and better.