Should You Pay Off Your Student Loans Before Buying a House?

Purchasing a home can be an exciting investment opportunity to help you think about your future goals and improve your current quality of life. But for the many college graduates still burdened with student debt—and wondering if it really is financially smart to continue renting, it’s important to know the pros and cons of such a weighty commitment.

share article

Pros of buying a house with student debt

Home ownership can be, in the long run, less expensive than renting and can provide owners a significant amount of emotional stability. Experts predict that the entire real estate market, including housing prices, interest rates and rental prices, will continue to rise annually. If you can manage it, home ownership can make good financial sense. Experts continue to argue that home ownership constitutes one of the most worthwhile investments available.

While it may be distressing to know that student loan debt is hanging over your financial future, it’s not as detrimental to your credit rating as you may think. Student debt loans typically have relatively low interest rates and more generous repayment terms, which means that you may be able to juggle both a mortgage and student debt.

Your situation, of course, varies greatly from case to case. There are student loan forgiveness or discharge programs offered by employers or volunteer organizations, so it’s worth checking the legal dimension of the grounds on which you were lent money in the first place. With laws on forgiveness programs being continuously updated, you may be able to get out from under student loan debt quicker than you think.

Many financial advisors believe that home ownership should take priority, whatever time frame you’re dealing with. If you’re able to make a large down payment on your house, it will lower monthly mortgage costs. That means that you may want to, in any case, prioritize saving with the goal of home ownership and place your student debt repayments on the back burner.

Become a homeowner with LendaApply now

Cons of buying a house with student debt

The most obvious disadvantage of home buying with outstanding student debt loans is that you may get worse mortgage offers as long as debt is looming over your life. With every year, student loan debt accrues more interest and if the interest rate is variable, it could go up with time.

Moreover, while home prices have risen in recent years, there is no telling if we’re in the midst of a real estate bubble. Home ownership investments are, at the end of the day, probably the biggest commitment of your life, so it’s recommended to do comprehensive research.

Keep in mind

With a little bit of planning, it’s possible to both purchase a home and continue to pay off student debt. First, you need to make a thorough accounting of all your student as well as other kinds of debt, including car loans, credit cards and anything else. This will enable you to understand your status and be aware of where you can afford to take some risks. It will also allow you to see which debt is the most high-interest, so that you can prioritize paying it off. It will also allow you to see if there are possibilities to consolidate your debts, so that you can lower interest rates and, ultimately, get started on saving for a home down payment. Be aware that any decision you might will vary by time and place, so don’t forget to factor in an element of flexibility.

Top student loan refinancing provider 2019

4.69% - 8.10% APR Range
180-240 Months Loan Term
Variable Min credit score

3.89%-8.02% APR Range
60-240 Months Loan Term
Variable Min credit score

3.25%-5.00% APR Range
60-240 Months Loan Term
Variable Min credit score

3.75% - 7.65% APR Range
60-180 Months Loan Term
Variable Min credit score