Robert Rieger

Millennials looking to purchase their first house are faced with a challenge unique to their generation Other generations borrowed to go to college, but the rising cost of school has saddled millennials with an unprecedented level of debt. According to the Federal Reserve, student loans totaled $240 billion in 2003; by the end of 2019, that number reached $1.51 trillion. In 2003, student loans were 3.3 percent of total household debt; in 2019, it was 10.7 percent.
While student loans will indeed be a barrier to getting a mortgage, they don?t have to prevent you from qualifying for a loan or from getting a good rate. Like much of what lenders evaluate in your application, student loans are just a piece of the puzzle.
Student loans factor into what is called your debt-to-income (DTI) ratio. Your DTI is your monthly debt (loan payments on things like your car, credit cards, and student loans) divided by your monthly gross income (your pre-tax income before any expenses are taken out, which you can usually find on your pay stub). Lenders calculate this ratio twice?once without your mortgage (front-end) and once with it (back-end). Lenders generally won?t extend a mortgage to someone who has a front-end DTI of more than 28 percent or a back-end DTI of more than 36 percent. If you?re on the wrong side of those numbers, all is not lost; there are steps you can take to help.
Your best move: Pay your debt down
If your debt relative to your income is too high, t...