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Can Students Get a Mortgage?

It is no secret that a student’s life is expensive. When you add rent to that bill, you can not stop wondering can a student get a mortgage? Aside from student debts, paying rent on top of that can seem like wasting of money. 

Can students get a mortgage? Students can get a mortgage if they have enough money for a down payment and monthly payments. Students may also need a cosigner to be approved for the loan. Mortgage lenders typically look for borrowers who have steady income and good credit scores. Students who are just starting their careers may not meet those qualifications yet, but there are still options available to them.

It has become increasingly popular among students to take a leap of faith to purchase a place instead of paying the rent. Still, there are criteria students must fulfill in order to get the money for a house purchase. In this article, we will go through all the factors and possibilities students can explore. 

How to Buy an Apartment While You Are at College 

Getting an apartment or house while you are still in college can benefit you greatly in the long run. Maybe your monthly payments will be higher, but you will invest in property you can, later on, sell or rent to other parties. Still, there is no such thing as a student mortgage per se.

You will not apply for any specific loan but for regular mortgages. On the other hand, if you are already employed and have a good salary, you can apply for this loan without anybody co-signing. 

What Are the Criteria for Getting a Loan to Buy a House as a Student? 

When applying to get money from lenders, your finances will be assessed thoroughly. The lender will have to check your income in order to see if you have enough money to pay your monthly rates.

As you may know, all lenders will use FICO to check your credit score, so this will be the first criteria to look out for. When calculating whether you are eligible for a loan or not, the lender will first have to calculate the debt-to-income ratio or DTI. In order to do so, the lender will check all loans you may have.

These are the criteria you must meet before applying: 

  • Low debt to income ratio,
  • Credit score above 600,
  • Down payment of 20% or 3.5% for FHA loans,
  • A monthly income that can support house payments.

You Will Need a Big Deposit for Your Student Mortgage 

Still, most collegians don’t have full-time jobs, and most of them can not afford these payments. So how to overcome this problem? If you leave a large deposit or have access to certain funds or inheritance, the down payment can be lower, or you may not need a co-signer.

But if this is not the case, you will have to leave a 20% down payment and maybe still not qualify for a loan. 

Find Someone to Co-Sign With You

This will probably be something you will have to do, whether you apply for an FHA or any other loan. Most lenders will want to have someone on a lease as well, and their money too.

Parents or grandparents usually help collegians by co-signing. They usually have to put up their own houses or assets to guarantee monthly payments to the bank.

Types of Loans You Can Apply For 

One of the first things we will recommend to you as a collegian is to try and get a house through the US Department of Housing and Urban Development — also known as HUD. The HUD program offers houses for one dollar. The whole idea of this program is to help people buy homes at low prices.

These homes are acquired by the Federal Housing Administration through foreclosure actions. But if you are not keen to purchase a house through this program, you can apply for other ones.

Here are loans you can apply for as a scholar and their rates and fees.

Type HUDFHA Loans Conventional loans
Down Payments20% 3% to 3.5% 20% 
House price Low averageaverage
Chances to get this loanHighHighLow without co-signer 

Can I Have Student Loans and Buy a Home?

One of the biggest concerns to all students and lenders is student loans you either have or will have in the future. So before you even start applying for a mortgage, it would be good to get your debts in order.

If you have school debts, you can use the option of deferring payment on the debt while you’re in school, and it is possible that your lender will not calculate these debts in your DTI.On the other hand, paying your debts now can benefit your overall credit score.

Either way, you can consider using repayment plans of the Federal Student Aid office. These reduce your monthly loan payments and, at the same time, lower your DTI. Also, the new administration has announced changes in FHA student loan calculations.

Under the changed FHA policy, lenders can use a borrower’s actual monthly student loan payment amount instead of 1% of their outstanding student loan balance.

Check this video for more information on how to get a house even if you’re burdened with debts.

Can a Student Get a Mortgage?

As you can see, no matter if you are a student or a first home buyer, you will be able to purchase a home. Your school debts will not be in your way per se, and there are many programs you can sign up for when you are a first-time homebuyer.

Just be careful when deciding whether you should buy a home or not – calculate your expenditures and make an investment that will pay off.

Do not buy homes you must renovate or refurbish yourself. Even though this sounds like a good idea, you will most likely not have enough money or time to do so.