My student loan total comes to about $20,000. I am planning on paying about double the required payment, on time, each month (and more if I get a better job!) Would it be possible for me to get a mortgage on a house in about 5 years if I pay my loan off on time every month until then? I don't think it will be paid in full at that time, but it should be 3/4 of the way paid off. I'm just trying to do some financial planning for the future. Please guys, only respond if you have PERSONAL experience with purchasing a house when you've had outstanding student loans, or if you work at a bank and have first hand knowledge of the requirements. Thanks!
There are a number of factors considered when you apply for a mortgage. Your job, the length of time you have been at the same job, etc. as well as your credit score. A student loan isn't any different than any other debt. If you owe so much that your debt to income ratio is too high (you cannot make your monthly payments), you will be denied a mortgage. In order words, your student loan will be added to all your other debts, to determine your debt to income ratio. It is great you are paying off your student loan but do not incur other debts along the way because the student loan might be paid off by your other loans might prevent you from getting a mortgage. In addition, don't pay so much on your student loan that you cannot save for emergencies and a down payment for when you apply for a mortgage.
Also, since mortgage interest is tax deductible and you are gaining nothing by renting, don't put off buying a house in a couple years just because you have student loans. If you can comfortably make a mortgage payment and your student loan payment, then consider home-ownership.
You shouldn't have a problem if you have income that shows that you can afford the payments on the student loans and the house, and your credit shows a good payment history for anything you owe. Remember you'll need to save up a down payment for the house, so don't put ALL of your extra money on the student loans, even though you're plan to pay them off asap is good.
It really completely depends on your income, and what other debt you have.
By that point you will have very well-established credit, with great installment-loan history. Your only problem you may run into is your income vs. your debt, known as the debt-to-income ratio. That's why it depends on what other debt you have as well.
If the 1/4 of the loan, or roughly $5k, is the only debt you have at that point, then you should be fine.
If your credit score, debt to equity and down payment support a loan you should be able to get one.
The finnacial melt down in 2008 is people with little income buying to much house
It depend your income, how much house you want to buy
Usually your house to income ratio is 2.5.
For example , your income is 100k, your ability to buy the house is 250k. Depend of your down payment too.
First and Foremost.
KEEP YOUR FICO score clean.
iF you want to purchase a house in 5 years. Do not buy a fansy car, do not buy expensive itemand put on the credit card.
In the mean time, put aside for Retirement account like 401k, Roth IRA.
Do not put on credit card debts.
In my personal experience, When I purchased my home, the day i choose my home and the day closed on the house. Except the built on land. There was no hitch on paper work. The bank was able approved my loan instantly after credit check, asset check, and debt check
AT the time i am buying. My 401k, Roth IRA, cash on hand total about 150 k and no debt.
They are happy to sign the loan for me without hesitate.