Getting a Mortgage While Being a Student

A home is probably the largest purchase you'll ever make in your lifetime. It requires a lot of time and discipline. But it's a decision that shouldn't be taken lightly. After all, it costs a lot of money for anyone—even those who work full-time.

Buying a home can be even more challenging for someone who may be paying for college, too. But just because you're a student doesn't mean it's impossible to live the dream. If you're still a student and want to be a homeowner, read on to learn more about what you need to know about being a college-going mortgagor and tips you may be able to use to balance the two.

Key Takeaways

  • Being a college student doesn't disqualify you from getting a mortgage.
  • You'll need a strong credit score, access to a down payment, employment and/or income, and a low debt-to-income ratio to qualify for a mortgage.
  • If buy a home but live in the dorms, you could, in theory, rent it out for income.
  • FHA loans come with low-interest rates and low down payment requirements.
  • You may need a co-signer in order for the bank to give you the loan.

The Costs of Homeownership

According to the St. Louis Federal Reserve Bank research department, the median sale price for a home in the United States was $357,300 as of Feb. 2022. But remember, this is just the median. Home prices tend to vary dramatically from region to region. For example, if you attend the University of Cincinnati, you’ll be able to find a more affordable home than if you attend New York University and seek an apartment in New York City.

In some regions, it may even be possible to buy a home with rooms you can rent out to other students for some extra income. This may end up being cheaper than paying for four or more years of dorm living, and can help you fund your mortgage payments. If you leave the area after graduation, you can sell the house or keep it as a source of rental income.

Do You Qualify for a Mortgage?

Like anyone else, you'll still need to qualify for a mortgage. Unless, of course, you have a handy inheritance or wealthy parents. But let's face it, most of us don't fit into that category. But just because you're a student, doesn't mean you won't qualify. You will still need the same criteria as anyone else to get a mortgage: A great credit score and enough equity to be considered. Keep in mind, though, that many lenders have tightened their requirements for mortgage clients.

Depending on the kind of home you purchase and the kind of mortgage loan you get, you'll need to make sure you're gainfully employed—or at least have a form of steady income—and have a fairly low debt-to-income ratio. And don't forget your down payment. If you try to get a conventional mortgage, you'll have to sock away as much as 20% of the total purchase price to put down.

We've tried to make things simple so you can visualize what you'll need to pay for a mortgage. So here's an example of what some of the costs will be for a $300,000 home, according to

  • Purchase price: $300,000
  • 20% down payment: $60,000
  • Monthly payment for a 30-year fixed rate mortgage at 3.551% interest rate: Principal + Interest + Property Taxes + Insurance = $1,449

If this scenario is out of your price range, there are other options if you’re a student seeking a home mortgage. Know from the outset that you have to be at least 18 to apply for a loan and purchase a home (or older in some states).

Don't buy a home if it doesn't make financial sense, especially if you're a student.

Home Buying Programs


The U.S. Department of Housing and Urban Development—also called HUD—is charged with creating strong communities with affordable housing for everyone. Created in 1965, the government agency improves homeownership opportunities at more affordable levels. HUD has an abundance of resources as well as special programs for first-time homebuyers. It also provides homebuyers with state-specific programs for anyone looking to buy a home.

FHA Loans

The Federal Housing Administration (FHA) provides mortgage insurance on loans made by special FHA-approved lenders under the HUD umbrella. These lenders are willing to make FHA home loans with lower down payments because of the government guarantee. Unlike conventional mortgages, you may be able to secure a loan as a student with as little as 3.5% of the purchase price to put as a down payment. This, of course, depends on which state you're seeking to make the purchase.

FHA loans may also give you a lower interest rate. Most of these mortgages come with a fixed interest rate, allowing people—including students who qualify—to finance as much as 96.5% of the purchase price of the home. This helps cut down on extra costs like closing costs. It can also help keep your mortgage payments down. You may also qualify for the 203(b) home loan, which allows you to fund 100% of the closing costs from a gift from a relative, government agency, or a nonprofit.

You can look up the FHA mortgage parameters on the HUD website.

Impact of Student Loans

If you have student loans, you can defer payment on the debt while you're in school, which means you're able to reduce your overall debt load as a student. So, it’s possible that when your lender calculates your debt-to-income ratio to determine whether you can afford a mortgage, the future student loan payments may not be factored into the equation.

On the other hand, if you’re paying your student loans in a timely manner, this can help create a positive credit profile. You may want to consider using one of the income-driven repayment plans offered by the Federal Student Aid office, which reduces your monthly loan payments. Most federal student loans are eligible for one of these plans.

Consider a Co-Signer

If you're a part-time student and have a job or a working spouse, you may have enough income to qualify for a modest loan. But if you lack sufficient income, you may still qualify for a mortgage with a co-signer. A parent, guardian, or significant other may typically be able to co-sign the mortgage loan if that person has sufficient resources, income, and a satisfactory credit profile. The co-signer on a loan doesn’t receive the loan proceeds but is liable for repayment if you fail to make loan payments. So it's important that you keep up to date with your payments, or risk losing the relationship. 

I am a College Student, Can I Get a Mortgage?

If you can qualify for a home loan, a lender shouldn't discriminate against you, if you are a college student.

Will My Student Loans Impact Getting a Home Loan?

Your student loans are part of your debt-to-income (DTI) ratio. Lenders do look at your DTI as one of the factors in qualifying for a loan. If you have a hefty amount of student debt, taking on additional debt, even in the form of a mortgage, could put you are risk for defaulting on either loan.

Can You Use Student Loans to Buy a House?

It isn't advisable to use student loan money for anything other than your educational expenses. If you are reported to the U.S. Department of Education, you could be ordered to repay your student loans immediately. And lenders will ask you to document your financial records, i.e., an influx of cash from a student loan will probably be examined by the underwriters.

The Bottom Line

Even if you can qualify for a mortgage, that doesn’t mean buying a home is the right decision. For one thing, it requires a number of transaction costs, such as realtor commissions, taxes, fees, and more. If you plan to own your home for a long time, it’s likely that you’ll recoup those initial costs, as your home value appreciates. But if you plan to live in the area for less than five years, you may be financially better off renting or even living in a dorm.

That said if you have good credit, a steady income source, and you expect to stay in the area for a while, buying a home while in school may be a wise decision. Provided you’re willing and able to serve as a landlord, renting out rooms in the home could be a good way to help cover your mortgage. However, as with any major life decision, you should evaluate your lending options and personal situation first.

Article Sources
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