Hi! I can imagine that it must be frustrating to have done everything “right” – did great in high school, graduated college, got a great job – and now feel as if you are blocked from doing the next “right” thing that Americans do – buy a home…all because you did the “right” thing in taking out a loan for college.
Even with a top credit score, home mortgage lenders take into account your debt-to-income ratio in deciding if they will lend you money. This article from US News (http://www.usnews.com/education/blogs/student-loan-ranger/2014/10/29/afford-a-mortgage-with-student-loan-debt) explains the situation well: “Debt payments include mortgages, auto loans, student debt, credit card debt and any other installment or revolving debt. It does not include other budget expenses such as utilities. Most lenders will not approve you for a mortgage if your debt-to-income ratio exceeds 43 percent. Let’s say you’re a recent college graduate earning $45,473 annually – the average for the college class of 2014. Your gross monthly income would be about $3,789. You have a car loan monthly payment of $200 and a credit card payment of another $200. On top of that, let's say you have $30,000 in student loans, about the average amount of debt for graduating college seniors. Assuming this is an unsubsidized Stafford loan at 4.6 percent interest, you'll be left with a monthly payment of $312. Now, let's say you’re applying for a home loan of $222,261 with a $1,061 monthly payment – the national average. Your total monthly debt payments would total $1,773 and your debt-to-income ratio would be around 46 percent, putting you over the 43 percent threshold and potentially out of luck for buying that particular house.”
So it may be that you can afford a house, but you will need to get your debt-to-income ratio under 43 percent. It is so hard to reduce debt – either a person needs to spend less money or earn more money. In your case, it’s unlikely that you can cut your expenses so much that you can save huge amounts or substantially increase your loan payoff rate. Earning more is almost definite in the future as you get more experience, and you could even maybe earn some extra money now with a second job or doing some consulting.
At this time with the loan burden you have, buying a might be difficult or not possible right now as you ask in your question. You may need to plug a long for a while getting raises and bonuses and chipping away at your debt before you will be able to buy a home. But at some time, especially if you have the help of a spouse or significant other, you will be able to, I am sure.
Best wishes to you and thanks for writing!
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