The Top 6 Ways to Tackle Student Loans and Homebuying

March 18, 2022 | by Anna Orendain

Categories: First Time Buyer, Home Buyer Education, Homeownership

Last updated: July 9, 2024

If you’re one of the many Americans who recently graduated with student loan debt, it is very important have a financial game plan -- especially for those hoping to buy a home one day. With this in mind, we've gathered a few tips on what you can do now to best position yourself to qualify for a mortgage.

1. Update your contact information on your loan servicer’s website. This will allow you to stay up-to-date with news about your loans and any assistance/forgiveness programs you may be eligible for.
2. Review your required monthly payment. If your current repayment plan no longer works for you, consider asking your servicer about an income-driven repayment (IDR) plan, which will make your payments more affordable by matching them to your level of income.
3. Enroll in automatic payments. It builds credit to pay your bills on time! Signing up for autopay plans can help you demolish your debt without even needing to think about payment deadlines.
4. Calculate your DTI ratio. Debt-to-income ratios are an important factor when applying for a loan, since they help lenders estimate the amount of a borrower’s income that is allotted towards debt. You can improve your DTI ratio by paying down debts, switching to an IDR repayment plan, or refinancing your private student loans.
5. Get pre-approved by a lender before starting your home search. Knowing the loan amount that you qualify for will help you stay in budget while you shop around for your dream home.
6. Consider homeownership programs like those offered by TSAHC. Saving up for a down payment can be one of the biggest hurdles for getting into a home, but TSAHC offers multiple options for down payment assistance, available as either a grant (which never needs to be repaid) or a forgivable second lien loan. First-time home buyers may also qualify for a Mortgage Credit Certificate, which saves homeowners money on annual federal income taxes.

Additional Resources

• Check out financial education and credit counseling opportunities. These nonprofit counseling services can help you improve your credit, reduce your debt, and gain better financial security. Find opportunities near you by visiting the Texas Financial Toolbox website.
• Visit StudentAid.gov for more resources involving student loan repayment and finding your student loan servicer.

If you’d like to start preparing to buy a home, we recommend visiting our “10 Steps to Homeownership” guide, which gives you a bird’s-eye view of the homebuying process.

On the House blog posts are meant to provide general information on various housing-related issues, research and programs. We are not liable for any errors or inaccuracies in the information provided by blog sources. Furthermore, this blog is not legal advice and should not be used as a substitute for legal advice from a licensed professional attorney.