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Student Loan Debt and Buying a Home: You Can Have Both

February 28, 2019

You continued your education after high school with plans to build a solid future. Is the cost of that choice causing you to postpone part of that vision? Rather than go out and buy a home, Millennials are paying rent or living at home. The reality is, you can have student loan debt and still buy a home. Riverside Homebuilders wants you to know how doable it really is.

A study by the National Association of Realtors and American Student Assistance reported that 55% of people who have student loans have put off buying a home because of that debt. They’re not even exploring the opportunity!

Apartment List surveyed 6,400 Millennial renters, and 62% said lack of a down payment is the major obstacle to buying a home. Of these potential first-time homebuyers, 89.4% said they want to buy a home at some point, but only 4.4% saw it happening in the next year and 30.4% are looking at homeownership in five years or longer.

"We estimate that 23 percent of college graduates without student debt can save enough for a down payment within the next five years, compared to just 12 percent of college graduates who are currently paying off student loans,” the study reported, adding that 70.9% of them could afford the monthly mortgage but hadn’t saved enough for the down payment.

While we don’t want anyone to take on more debt than they can handle, if you’re paying rent and your student loan, you can probably buy a home. 

Maybe you’re living with your parents so you can save up enough for a down payment on a house. Guess what? You could buy a home with as little as 3.5% down or NO down payment at all!

Get the mortgage facts

Before you decide that the dream of homeownership is just that—a dream—talk to a lender.

Review your credit report with a mortgage professional to make sure it’s accurate. You might be surprised to know how often errors appear without you ever knowing about them. That’s why it’s important to check. You can get a free credit report once a year, without impacting your score. A knowledgeable lender can tell you which programs you qualify for, based on your current situation (income, debt-to-income ratio, down payment, credit score) and also offer advice to put yourself in an even better position for a home loan. 

From zero to 20

A lender can give you details about the various mortgage programs available, like:

Conventional home loan. Maybe someone—or several “someones”—told you that you need 20% to put down on the purchase of a home. The National Association of Realtors estimates that the average down payment on a home is 10%. Generally, you only need 5% for a conventional loan as long as your credit score is at least 620.

USDA home loan. This loan allows you to buy a home with zero down payment. Yes, you can finance 100% of the loan, often including the closing costs, too. The home must be in a qualified rural or semi-rural location, which allows for a broad span of areas, and you need a minimum 620 credit score. Riverside Homebuilders has a large selection of new homes that qualify for the USDA home loan.

FHA home loan. This government-guaranteed loan requires as little as 3.5% down with a minimum 580 FICO score. You can still qualify if your credit is between 500 and 579, but your down payment will be 10%.

Portfolio loan. Lenders have another resource for home loans. Also called a "Second Chance" loan, this mortgage program is a good option for people who don't have an impeccable credit history. There is more leniency with the requirements for a portfolio loan, but the rates could be higher.

Riverside Homebuilders’ preferred lenders have the details on all of these home loan programs. They also know about our communities and homes in the DFW metro. We currently have 8 communities that qualify for the USDA no-down-payment loan. The new construction, single-family homes start at just $204,900. Use this mortgage calculator to see how the down payment affects your monthly mortgage cost. And contact us to get on track so Riverside Homebuilders and our preferred lenders can guide you on a straight path to homeownership now.

Riverside Homebuilders
3045 Lackland Road Fort Worth, TX 76116
Sales: Call or Text (817) 601 - 6230
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