Student Loan Borrower Homebuying Guide

If you’re one of 43 million Americans with student loans, you might think your biggest obstacle to homeownership is saving for a down payment. But for most borrowers, the real roadblock isn’t cash — it’s how lenders calculate your debt-to-income ratio (DTI) using outdated rules.

Our new LoanSense Homebuying Guide video breaks down exactly how much home you can afford — and how optimizing your student loan payments can boost your buying power by up to $200,000.

1. What Is DTI — and Why It Matters

DTI compares your monthly debts (credit cards, car, student loans) to your monthly income.
Lenders want your total DTI — after adding your projected mortgage — to be under 50%.
That’s called your back-end ratio, and it determines how much home you can afford.

2. How Student Loans Skew Affordability

Many borrowers are penalized by how Fannie Mae and Freddie Mac calculate student loans:

• Fannie Mae counts 1% of your total loan balance as a monthly payment
• Freddie Mac and FHA use 0.5%

So, if you owe $100,000, Fannie assumes $1,000/month — even if your actual IDR payment is $200.

That $800 difference slashes your affordability and can disqualify you from homes in most markets.

3. How LoanSense Fixes the Problem

LoanSense helps borrowers document their actual payment — the one based on your income — and updates your lender’s file before underwriting.

Example:
A borrower earning $200K with $300K in student loans could see affordability rise from $641,000 → $819,000 simply by verifying an IDR payment of $1,800 instead of $3,452.

LoanSense automates the paperwork, connects with your servicer, and gets the right documentation in time for close.

4. What You Can Afford at Different Incomes

Here’s how affordability scales based on income (assuming 3% down and 7% interest):

• $50,000 in income can help afford a $230,000 home
• $100,000 in income can help afford a $460,000 home
• $150,000 in income can help afford a $690,000 home
• $200,000 in income can help afford a $812,000 home
• $250,000 in income can help afford a $1 million home

But add student loans with the wrong payment — and you could lose half that buying power instantly.

The affordability depends on interest rate, loan product, down payment amount and total other debts. This is just a ball park number.

5. The Urgent 2026 Deadline

A Newsweek report warns that forgiven student loans could soon be taxable again, with borrowers facing $5,000–$10,000 IRS bills when the exemption expires after 2025.
At the same time, the new Repayment Assistance Plan (RAP) will raise minimum payments — making today’s lower IDR plans a limited-time opportunity.

6. Next Steps

🎥 Watch the full LoanSense Homebuying Guide: https://youtu.be/kPyWPEapUOc
💬 Book your consultation ad receive $20 off with code LS20Off: https://app.myloansense.com