Student loans affect your mortgage qualification through your debt-to-income ratio. Lenders compare your total monthly debt payments, including student loans, credit cards, car payments, and the proposed mortgage, against your gross monthly income. Most programs cap this ratio at 43 to 50 percent. However, the monthly payment amount used for student loans varies by program. FHA uses the actual reported payment, conventional loans use one percent of the balance or the actual payment, and VA uses the actual payment. The calculation method matters enormously for borrowers with large balances.

Yes, but the calculation varies by loan program. FHA uses the actual reported payment, which may be zero during deferment. Conventional loans may use one percent of the outstanding balance as the assumed payment, or the actual IBR payment if documented. VA loans use the actual payment or five percent of the balance divided by 12 if no payment is reported. Getting pre-qualified with a lender who understands these nuances is critical.

Not necessarily. If you can qualify for a mortgage while carrying student loans, buying sooner allows you to build home equity while benefiting from property appreciation. In many markets, the equity gained in one to two years of homeownership exceeds the interest saved by paying off student loans first. The exception is if your student loan payments are preventing mortgage qualification entirely, in which case strategic paydown of specific loans may be the fastest path to approval.

There is no absolute dollar threshold. What matters is how your monthly student loan payment compares to your income. A borrower earning 100,000 dollars annually with 500 dollars in monthly student loan payments is in a very different position than someone earning 50,000 with the same payment. The key metric is your total debt-to-income ratio. If your student loans plus other debts plus your target mortgage payment stay below 43 to 50 percent of your gross income, you can likely qualify.