How Student Debt Deters Buying a Home, and What To Do About It

By Vance Cariaga

February 28, 2022

fizkes / iStock.com

A new survey from the National Association of Realtors shows just how much of a barrier student debt is against home ownership, with more than half of non-homeowners polled saying that student debt is preventing them from buying a home.

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The survey results were included in a September report titled “The Impact of Student Loan Debt” and came from a June poll of 1,995 student loan debt holders conducted by Morning Consult on behalf of the NAR. Among the findings, when asked specifically about purchasing a home, 51% of non-homeowners said student loan debt has delayed them from buying one.

The reasons for this vary. While 47% percent said they can’t save for a down payment because of student loan debt, another 45% said they don’t think they can qualify for a mortgage due to their debt-to-income ratio. Of those who said student debt has delayed a home purchase, 43% conceded they’d never even applied for a mortgage.

Here are some other findings from the survey:

• Millennial non-homeowners (60%) are more likely than Gen Z (39%), Gen X (53%) and baby boomers (37%) to say student loan debt is delaying them from buying a home.
• Nearly three-quarters (72%) of non-homeowner student loan debt holders said they believe student loan debt will delay them between 0-6 months to more than eight years. Another 19% said they believe student loan debt will delay them more than eight years.
• Interestingly, among non-homeowners, debt holders in households making more than $100,00 a year (60%) are more likely than those making less than $50,000 (48%) to say student loan debt is delaying a home purchase.
• Non-homeowner debt holders in the Northeast (61%) are more likely than those in the Midwest (45%), South (50%) or West (50%) to say student loan debt is delaying a home purchase.

The survey was conducted during a period when home prices are rising rapidly across the United States, which makes it even harder for many to afford a home.

So what can you do if you believe student debt is delaying your home-buying plans? Your first priority should be to stay current on your student loans and other debt so your credit score doesn’t get nicked.

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After that, explore moving your student debt into a plan that can lower your monthly bill. One option is to switch to an income-driven plan like those outlined on the U.S. Department of Education’s Federal Student Aid website. Mark Kantrowitz, a higher education expert, told CNBC that borrowers should change their repayment plans at least a year before applying for a mortgage.

Another way to improve your chances of buying a home is to increase your income, either by finding a better-paying job or asking your current employer for a raise or promotion. This might be the ideal time to do so. As previously reported by GOBankingRates, the current labor shortage has given employees more opportunities and bargaining power.

Finally, don’t put yourself deeper into debt by buying a car or other expensive item you can live without. Delay these purchases as long as possible until you’ve worked through more of your student loan debt. Whenever possible, avoid credit card purchases, and if you do have to make them, pay your balances off every month. Put any extra money into saving for a down payment on your future home.

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About the Author

Vance Cariaga

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.