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If you are one of the more than 40 million Americans with student loan debt, the dream of buying your own home may feel like it is out of reach. Having student loan debt can make it harder to qualify for home financing, but you shouldn’t give up hope. Here are some ways you can manage your credit and debt to put yourself in a stronger position to finance and purchase a home.

Improve Your Credit Scores

One of the most important requirements to qualifying for home financing is having strong credit scores. Thankfully, carrying student loans doesn’t have to hurt your scores, and it may even improve them by contributing to your credit profile. Simply making your minimum payments on time for your student loans and other debt and bills will go a long way toward building and maintaining strong scores. Click here for more information on improving and checking your credit scores.

Manage Your Debt-to-Income Ratio (DTI)

Your DTI is an important factor that mortgage lenders evaluate. As a rule of thumb, it may be difficult to qualify for a mortgage if it will push your monthly housing expenses (including your new mortgage payment) past 28% of your gross monthly income and push your monthly debt payments (including your current debt) past 36% of your gross monthly income. If possible, reducing your debt payments and/or increasing your income to stay below these thresholds can help you qualify for and afford the mortgage you need.

Consider Restructuring Your Debt

If the size of your student loan payments is limiting your home financing options, restructuring your debt may be the solution. If you qualify, you may be able to refinance your student loans to reduce your monthly payments. If you have federal loans, you may also qualify for an income-based repayment plan that would also lower your payments. Don’t forget to look for opportunities to refinance any non-student-loan debt as well, such as paying off high-interest credit card debt with a lower-interest personal loan.

Talk to a Mortgage Lender and Get Preapproved

Speaking with a mortgage lender is one of the easiest ways to find out if you’re ready to purchase and finance a home. They will examine your credit and finances and let you know if you still have work to do or if you’re ready to obtain a loan for your home purchase. If you’re ready, the lender should be able to preapprove you for a home loan. Your preapproval will show you exactly how much you can borrow, and it’s a strong confirmation that you can meet the requirements for your loan.

If you or someone you know wants to find out if they’re ready to buy a home, get in touch for a free mortgage consultation and preapproval.