Mortgage With High Student Loan Debts: How to Qualify in 2025
At Gustan Cho Associates, we specialize in helping borrowers turned down elsewhere. We have no lender overlays and work with over 280 wholesale lenders, giving you real options when others say no.
In this guide, you’ll learn:
- How each loan program (FHA, VA, USDA, Conventional, Non-QM) views student loans
- How student loan debt affects your mortgage approval
- Creative solutions to qualify even with six-figure student loan balances
- 2025 updates every borrower should know
- Why Gustan Cho Associates is the right partner if you need a mortgage with high student loan debts.
How Student Loan Debt Affects Mortgage Approval
Student loans impact your mortgage in three big ways:
- Debt-to-Income Ratio (DTI): Lenders must count a monthly payment against your income, even if your loans are deferred.
- Credit Score: Large balances can weigh on your credit utilization and history, affecting automated underwriting approvals.
- Loan Program Rules: Each program — FHA, VA, USDA, and Conventional — has its own formula for counting student loan payments.
For many borrowers, student loan balances are higher than the original loan amount due to years of accrued interest. That’s why doctors, lawyers, teachers, and professionals with advanced degrees often carry six-figure student loans — and still want to buy a home.
The key is knowing which loan program gives you the most flexibility.
Buy a Home Even With High Student Loans
Your student debt doesn’t have to stop you from qualifying.
FHA Mortgage With High Student Loan Debts
In 2025, the Federal Housing Administration (FHA) introduced new rules to help people with large student loan debts get mortgage approvals. If a borrower does not have a regular payment reported for their student loans, the FHA will create a monthly payment based on 0.50% of the total loan balance. For example, if a borrower has $100,000 in student loans, the FHA will assume they have a monthly payment of $500, which will be included in their debt-to-income (DTI) ratio.
If a borrower’s student loan servicer offers a payment plan that fully pays off the loan over an extended period—like 25 years—and this plan results in a lower monthly payment than 0.50%, lenders like Gustan Cho Associates can use that lower amount.
To be eligible for an FHA mortgage, borrowers must maintain a front-end debt-to-income (DTI) ratio of no more than 46.9% and a back-end DTI ratio that does not exceed 56.9%, as assessed by automated underwriting systems (AUS). These new guidelines bring FHA rules closer to those of Fannie Mae, making it easier for borrowers with high student loan debt to get FHA financing.
USDA Mortgage With High Student Loan Debts
Like the FHA, the USDA now mandates that all student loans, including those in deferment, be accounted for in the loan application process. When calculating these loans, the USDA considers either 0.50% of the total loan balance or the fully amortized payment. This requirement can significantly impact borrowers’ debt-to-income (DTI) ratios, as the USDA imposes strict DTI caps set at 29% for the front-end ratio and 41% for the back-end ratio.
The USDA loan program can offer a viable financing option for borrowers residing in rural areas due to its favorable terms designed for those communities. However, the stricter DTI caps present a challenge, particularly for individuals carrying substantial student loans, as they may complicate their chances of approval. Additionally, the USDA does not allow non-occupant co-borrowers, further limiting options for borrowers seeking assistance.
VA Mortgage With High Student Loan Debts
VA loans are super flexible mortgage options for veterans and active-duty service members, making them especially helpful for those dealing with a lot of student loan debt. A major benefit of these loans is that if your student loans have been deferred for over 12 months, the VA won’t include them when checking your eligibility. Only married spouses are allowed to be co-borrowers with VA loans.
For loans that aren’t deferred, the VA figures the monthly payment by taking 5% of the total balance and dividing it by 12. This approach can help reduce financial stress for borrowers.
Additionally, the VA does not have a set debt-to-income (DTI) cap, as long as you can show a strong leftover income after expenses. This means veterans and service members with student loan debts can often qualify for larger loan amounts than they would with other options, like FHA or USDA loans. As a result, it can be easier for those who have served in the military to achieve homeownership, even with significant student loan debts.
Don’t Let Student Debt Delay Your Dreams
We’ll show you flexible loan programs designed for borrowers with high balances.
Conventional Mortgage With High Student Loan Debts
Conventional loans are often the most suitable choice for borrowers with substantial student loan debt. These loans support income-driven repayment (IDR) plans or income-based repayment (IBR) plans, as long as the monthly payment is reflected on your credit report.
This is particularly beneficial for those with large student loans, because lenders will only consider the actual payment amount when calculating debt-to-income (DTI) ratios. For instance, if you owe $200,000 but are only required to pay $125 per month under an IBR plan, lenders will factor in only that $125 for your DTI assessment.
Moreover, conventional loans provide advantageous terms for borrowers with significant student loan balances. While the maximum allowable back-end DTI for conventional loans is 50%, there are no specific requirements for front-end DTI. This flexibility enables borrowers with high student debt and low IBR payments to qualify more easily for conventional loans than those with Federal Housing Administration (FHA) loans. Consequently, conventional loans can be a more accessible option for those looking to navigate the challenges posed by heavy student loan debts.
Non-QM and Alternative Mortgages With High Student Loan Debts
If government or Conventional loans don’t work, non-QM mortgages are another option.
- Bank statement loans (qualify using income deposits instead of tax returns).
- No-ratio loans (do not require DTI calculations).
- DSCR loans for investors (approval based on rental income, not personal debts).
These programs are especially useful for self-employed borrowers, professionals, or investors who want a mortgage with high student loan debts but don’t fit agency guidelines.
Long-Term Updates for 2025 Borrowers
Here are the key 2025 changes every borrower should know:
- Credit Scoring Updates: New FICO 10T and VantageScore 4.0 models will be phased in by 2025–2026, and they will better reflect student loan repayment history.
- Student Loan Forgiveness Programs: Borrowers in Public Service Loan Forgiveness (PSLF) or similar programs may benefit from lenders’ increasingly accepting IDR documentation.
- FHA/Conventional Alignment: FHA’s move to 0.50% calculation makes it easier for borrowers with deferred loans than the older rules requiring 1%.
Final Thoughts
High student loan balances do not mean you can’t buy a home. With the right strategy, repayment plan, and loan program, you can qualify for a mortgage with high student loan debts and achieve homeownership.
At Gustan Cho Associates, we help borrowers every day who thought they couldn’t qualify. Whether you need FHA, VA, Conventional, or Non-QM, our team has no lender overlays and the experience to guide you to approval.
Borrowers who need a five-star national mortgage company licensed in 50 states with no overlays and who are experts on mortgage with high student loan debt, please contact us at 800-900-8569, text us for a faster response, or email us at alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.
Do I need to pay off student loans before buying a house?
No—most lenders allow mortgages while loans are active.
Frequently Asked Questions About Mortgage with High Student Loan Debts:
Q: Can I Get a Mortgage with High Student Loan Debts?
A: Yes, you can. Many people buy homes even with large student loans. The key is finding the right loan program and lender.
Q: Do Lenders Count Deferred Student Loans When I Apply for a Mortgage with High Student Loan Debts?
A: Yes. Even if your loans are in deferment, most lenders still count a payment. FHA and USDA use 0.50% of your balance, while VA may ignore loans deferred for 12 months or more.
Q: Can I Use My Income-Driven Repayment (IDR) Plan to Qualify for a Mortgage with High Student Loan Debts?
A: Yes. Conventional loans accept your IDR or IBR payment as long as it shows on your credit report. This helps many borrowers qualify with lower payments.
Q: Will My Credit Score Stop Me from Getting a Mortgage with High Student Loan Debts?
A: Not always. Large balances may affect your score, but on-time payments matter more. Many borrowers qualify for a mortgage even with fair or average credit.
Q: What is the Maximum Debt-to-Income Ratio for a Mortgage with High Student Loan Debts?
A: It depends on the program. FHA allows up to 56.9% DTI, Conventional up to 50%, USDA 41%, and VA has no official cap if residual income is strong.
Q: Can I Add a Co-Borrower if I Need Help Qualifying for a Mortgage with High Student Loan Debts?
A: Yes. FHA and Conventional loans allow non-occupant co-borrowers to help you qualify. VA only allows spouses.
Q: Is a VA Loan the Best Choice for Mortgage with High Student Loan Debts?
A: If you qualify, go for it. VA loans offer flexibility and may exclude student loans that have been in deferment for over 12 months.
Q: Can I Still Buy a Home if My Student Loan Balance is Over $100,000?
A: Yes. Many doctors, lawyers, and teachers buy homes with six-figure student loans. The payment amount, not the total balance, matters most when getting a mortgage with high student loan debts.
Q: What Happens if I’m in Default on My Student Loans?
A: You cannot qualify for most mortgages until your student loans are brought back into good standing. Setting up a repayment plan is usually the first step.
Q: Who Can Help Me Get Approved for a Mortgage with High Student Loan Debts?
A: Gustan Cho Associates specializes in helping borrowers with student loans and no lender overlays. We can guide you through FHA, VA, Conventional, or Non-QM options.
This article about “Qualifying for Mortgage With High Student Loan Debts” was updated on August 28th, 2025.
Who can help me qualify with student debt?
Gustan Cho Associates specializes in approvals other lenders can’t do.
