Student loan debt could prevent many people from qualifying for a home loan, according to a new report from advocacy group Young Invincibles. The report indicated that the average single debtor—with a mortgage, consumer debt, and student loans—would have a debt-to-income ratio approaching 50%.
A debt-to-income of nearly 50% means that a borrower would be spending almost half of his or her monthly income on paying down their debt, an amount far too high to qualify for a mortgage, reported Inside Higher Ed . To perform the study, Young Invincibles calculated average monthly payments for student debt and credit card minimums for a variety of income levels and found that borrowers making below $60,586 would not be able to qualify for a $135,500 mortgage.
Report authors Jen Mishory and Rory O’Sullivan write that single borrowers, with the average amount of student debt–$250,000–and earning $50,000 per year, “would still worry about qualifying for a mortgage.” The picture doesn’t improve greatly for two-income households.
“Only households with less than average debt for both borrowers, or who exceed the median household salary, will qualify [for a mortgage],” wrote Mishory and O’Sullivan.
The authors also report that a two income household with both debtors holding the median amount of debt would “struggle to qualify” for some non-Federal Housing Authority mortgages.
One survey respondent told Mishory and O’Sullivan that she was glad that she and her husband were able to complete their degree, but that they “never would have guessed that student loans would prevent us from being able to buy a home for a long, long time.”
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