Tom Kalinski, RE/MAX of Boulder

Tom Kalinski, RE/MAX of Boulder

Many young would-be homebuyers are strapped with student loan debt that makes buying a house even harder.

But changes made by federal mortgage lender Fannie Mae make it easier for student loan borrowers to get a mortgage. And mortgage experts say if you are consistent with making your loan payments and the amount of your payment is a good fit with your income, student loan debt doesn’t have to be a barrier to buying a home.

Stark statistics confirm these changes are needed.

Nationwide homeownership for ages 24 to 32 fell from 45 to 36 percent between 2005 and 2014, reports the Federal Reserve. Increased student loan debt is linked to this age group’s homeownership rate dropping by two percentage points – resulting in over 400,000 young adults in the U.S. who didn’t own a home in 2014 because of the rise in debt.

To help student loan borrowers, in 2017 Fannie Mae added three flexible payment solutions for future and current homeowners. With these changes, lenders can consider lower, flexible payments; homeowners can pay down student debt with a mortgage refinance; and borrowers can exclude non-mortgage debt paid by others.

“We understand the significant role that a monthly student loan payment plays in a potential home buyer’s consideration to take on a mortgage, and we want to be a part of the solution,” said Jonathan Lawless, vice president of customer solutions, Fannie Mae.

More help comes from mortgage experts who have strategies for student loan holders to get into a better position to buy a home.

Experts say student loan debt holders should pay attention to two key metrics to increase their likelihood of mortgage qualification.

One, borrowers need to consistently make debt payments on time – whether student loan, credit card, or other types of debt payments. A good payment history can help your credit score, while getting behind on your monthly bills will cause your credit score to drop.

Even though student loan plans offer the option to defer payments, experts say it’s better to steer clear of this path if you are working toward buying a home. Deferring payments can make it difficult to get loan approval. And if you are approved for a home loan, the interest rate may be higher.

And two, manage the amount of your monthly student loan payment compared to income. This is factored into debt-to-income ratio, which is used to determine your ability to keep up with mortgage payments.

One tactic some would-be homebuyers use is to lower their monthly student loan payment by extending their repayment plan over a longer period time, or choosing a plan based on a percentage of income. If you choose to make these changes to your student loan payment, do it at least a year before applying for a mortgage.

Another option for managing debt-to-income ratio is to boost your income with a promotion or second job.

Even with these challenges, millennials are making progress. In September 2019, millennials accounted for 46 percent of all mortgage originations – a 43 percent increase from a year ago. This group is expected to dominate the market again next year. Millennials are expected to make more than 50 percent of all home purchases in 2020, according to

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By Tom Kalinski. Tom is the broker/owner of RE/MAX of Boulder, the local residential real estate company he established in 1977. He was inducted into Boulder County’s Business Hall of Fame in 2016 and has a 40-year background in commercial and residential real estate. For questions, e-mail Tom at [email protected], call 303.441.5620 or visit