I WANT TO BUY A HOME; WILL MY STUDENT LOAN DEBT COUNT? I run into this often when I'm working with first time buyers - either they think it may cut down on what they can buy - or they want to be sure they are planning on the worst case scenario.
The answer to this question is - "it depends upon the type home loan you get or qualify for". There are some home loan programs where it is not necessary to count the student loans if they are in deferrment for a year. If you have a degree to be a doctor or lawyer, maybe not counting the debt is a good thing because your expectation is that your income will increase rapidly. If student loan debt is left out of the monthly expenses, you most likely will qualify for a bigger house payment.
I mention above that it could be a good thing if the student loan debt does not need to be counted, BUT it could also be a bad thing. If the home buyer has not done the homework to determine what that student loan will cost them, then they may buy too much house and when the student loan goes into payment, they will struggle to keep their heads above water. It is wonderful that college students have a source for borrowing funds for school, but not every diploma is equal in providing the increased income for repayment without sacrifice.
I encourage home buyers to do the math - use whatever tools they have to determine the payment they will eventually have on those student loans. Then and only then can they make a decision about what they can afford for a house payment. Even if the full debt won't hit them for a year, at least they will be prepared for it.
Part of my job as a loan originator is to give good sound advice about any aspect of their finances I have knowledge of. To not do so would be reckless.
