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High student loan debt and low income....Is a mortgage possible???

New Member

High student loan debt and low income....Is a mortgage possible???

Hello:


I just finished up grad school, but with some significant student loan debt >$100,000 between undergrad and grad school. I also started a new job tha pays very little, <$35,000 a year (non profit job).  I have been renting a condo for the past 3 years and my landlord offered to sell me the place.  Mind you, we are just in the talking stages as he is not sure what the place is valued and said that if I decided not to renew at the end of the year he would short sell it to the bank.  Anyhow, after some research on similar condos for sale in my neighborhood, comparing the unit to the others, I would guess this unit would value around $150k. Anyhow, I wanted to know my chances of getting a mortgage with the high student loan and low income. The loan is my only debt, I do carry credit cards, but pay the balance in full every month. I do have a car, but I paid the loan off early last year.  My student loan is on the PAYE IBR at $80/month.  I am reading many loans don't use IBR monthly payments in the DTI calculation, but rather use 1% of total loan for the calculation.  If that were the case my DTI would be really high, which is what worries me other than the low income. Would I have any chances for a loan?  Oh I should note, my fico 8 scores range between 730-750 between the CB's, not sure if that is useful information. And for downpayment, I have $10k and could possibly ask my parents for help with down payment.  Thanks for any insight/advice.  

 

**I should also add, I have a clean report, no baddies and no lates. 

Message 1 of 16
15 REPLIES
New Member

Re: High student loan debt and low income....Is a mortgage possible???

If your student loan is your only debt, I'd say your chances are pretty good. It really does depend on your payment on the loan.

 

PM me if you'd like me to take a closer look.

Message 2 of 16
Frequent Contributor

Re: High student loan debt and low income....Is a mortgage possible???

Do you have any down payment saved?
150k on <35k/yr will be close. Mortgage calculator estimate says approx $1300 a month mortgage payment. Banks like to see less than 35% income to debt ratio. So total mortgage + student loan should be approx 35% of your monthly net.
Message 3 of 16
Established Contributor

Re: High student loan debt and low income....Is a mortgage possible???


work_n_progress2 wrote:
Do you have any down payment saved?
150k on <35k/yr will be close. Mortgage calculator estimate says approx $1300 a month mortgage payment. Banks like to see less than 35% income to debt ratio. So total mortgage + student loan should be approx 35% of your monthly net.

thats a good question i have 84k but my student loans are 100k and my goal in 3 years is to reduce all my credit card debt to only have my student loan, car and money for a mortgage. i want to reduce my debit, save and get my scores much higher than they are now.

Message 4 of 16
Super Contributor

Re: High student loan debt and low income....Is a mortgage possible???

I'm a little confused, is sparklerd34 the same as pecanpie?

 

Anyway, pencanpie, we'd need to know:

1.  How much property taxes on the condo are

2.  How much the monthly homeowners association fee on the condo is

3.  How much homeowners insurance on the condo is

 

You can ask your landlord those questions and they should be able to tell you.  Those figures are going to be important as the debt to income ratio is the primary factor in your situation on if you'll be able to get approved or not.   As far as the PAYE IBR payment, with Freddie Mac financing then it's possible to use the payment listed on the credit report, so $80/mo can potentially be used.

Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime) since 2002, based in Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

Message 5 of 16
New Member

Re: High student loan debt and low income....Is a mortgage possible???


ShanetheMortgageMan wrote:

I'm a little confused, is sparklerd34 the same as pecanpie?

 

Anyway, pencanpie, we'd need to know:

1.  How much property taxes on the condo are

2.  How much the monthly homeowners association fee on the condo is

3.  How much homeowners insurance on the condo is

 

You can ask your landlord those questions and they should be able to tell you.  Those figures are going to be important as the debt to income ratio is the primary factor in your situation on if you'll be able to get approved or not.   As far as the PAYE IBR payment, with Freddie Mac financing then it's possible to use the payment listed on the credit report, so $80/mo can potentially be used.


Thanks everyone for their input!  To answer some of the questions, I do have $10k of my own for downpayment, and my parents are open to help me out with down payment as well.

 

I wil need to find out the information about the HOA fees and Insurance. I do know the taxes are $1021 for the place.  And Pecanpie and sparkler34 are two different people.  Smiley Happy

Message 6 of 16
Established Contributor

Re: High student loan debt and low income....Is a mortgage possible???


ShanetheMortgageMan wrote:

I'm a little confused, is sparklerd34 the same as pecanpie?

 

Anyway, pencanpie, we'd need to know:

1.  How much property taxes on the condo are

2.  How much the monthly homeowners association fee on the condo is

3.  How much homeowners insurance on the condo is

 

You can ask your landlord those questions and they should be able to tell you.  Those figures are going to be important as the debt to income ratio is the primary factor in your situation on if you'll be able to get approved or not.   As far as the PAYE IBR payment, with Freddie Mac financing then it's possible to use the payment listed on the credit report, so $80/mo can potentially be used.


No im a different person. i have a high student loan as well but my income is high. I was wondering if it was something that was possible to obtain a house in the future of 2-3 years.  I know i have to increase my score, reduce my credit card balances and or pay off.  and lastly save save save.  Just wondering if i was dreaming of getting a townhome or house one day.

Message 7 of 16
Super Contributor

Re: High student loan debt and low income....Is a mortgage possible???


sparklerd34 wrote:

ShanetheMortgageMan wrote:

I'm a little confused, is sparklerd34 the same as pecanpie?

 

Anyway, pencanpie, we'd need to know:

1.  How much property taxes on the condo are

2.  How much the monthly homeowners association fee on the condo is

3.  How much homeowners insurance on the condo is

 

You can ask your landlord those questions and they should be able to tell you.  Those figures are going to be important as the debt to income ratio is the primary factor in your situation on if you'll be able to get approved or not.   As far as the PAYE IBR payment, with Freddie Mac financing then it's possible to use the payment listed on the credit report, so $80/mo can potentially be used.


No im a different person. i have a high student loan as well but my income is high. I was wondering if it was something that was possible to obtain a house in the future of 2-3 years.  I know i have to increase my score, reduce my credit card balances and or pay off.  and lastly save save save.  Just wondering if i was dreaming of getting a townhome or house one day.


Certainly it can happen.  For you I'd continue working on your scores, with a minimum goal of 680 but if you can wait until it's 740 you may be able to qualify for the best terms available. 

Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime) since 2002, based in Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

Message 8 of 16
Established Contributor

Re: High student loan debt and low income....Is a mortgage possible???

Thanks for the advice ShaneTheMortgageMan Yea I have given myself a min goal of 18 months and a max of 30 months just to see how long it takes.
Message 9 of 16
New Member

Re: High student loan debt and low income....Is a mortgage possible???

Hey All!

 

Thanks for all the information regarding mortgage...just an update. I was able to get a preapproval earlier this month!!  Since my last post, my landlord realized he was uanble to sell to me due to him being upside down on his mortgage on the place, so I'm on the condo hunt, which is becoming more daunting than I realized.  

 

But I do have a question regarding how long my preapproval is good for.  So as it turned out, i got two preapprovals, one earlier this month and the other over the weekend. Long story short, my preapproval from earlier this month was only good for a certain dollar amount, bc that's what I asked for. I wanted to put a bid on a place this past weekend which was higher than my prepproval letter and was unable to get a hold of my lender. I went with my realtor's lender and he was able to get my preapproval (but I lost the bidding war).  Anyhow, I wound up with 6 hard inquiries from the lenders doing my credit check.  I guess my question is, is the impact of those inquiries going to be significantly impactful on my score?  I know that during this home hunt process I will probably have to put numerous offers in before I get a place, which means I will probably have to go back for pre-approval letters. I decided that I will be working with lender I spoke to this past weekend, since he did all this work for me on a holiday weekend.  He said, that my credit pull would be good for 100 days and that if I don't do anything drastic, increase my debt dramatically or seek credit, I should be good.  He said that the pulls from him and the previous lender earlier this month has not major bearing on the credit score he is using and he said I had very good scores.  Smiley Happy  So is what he is saying true??????  Apologies for the long and drawn out post....and thanks in advance for any insight!

Message 10 of 16