California Buyers Worry Student Loans Prevent Pre-Approval


The national student loan debt has now surpassed $1.5 trillion and comprises 42 percent of all consumer debt. Millennials in California have some most of the student loans, which has increased 130 percent since 2008.

California Buyers Are Afraid Of Their Student Loans

With all these outstanding balances, it’s no wonder that California buyers are afraid that their student loans will prevent them from qualifying for a mortgage payment. Nearly 57% of all millennials (people born between 1981 and 1996) have student debts that they are still making payments on.

The sixth annual “NeighborWorks America at Home” survey reported that a “steady and significant” number of millennials are concerned with how their student debt will impact their ability to own.

Debt-to-Income and Student Loans

Student debt plays a large role in determining a California buyer’s debt-to-income ratio (DTI). DTI determines how much a buyer spends on recurring expenses (home payments, student loans, car payments, etc.) and how much income a buyer earns each month. Most lenders in California recommend that buyers stay within a 45% – 50% DTI limit.

There are ways Californias buyers can improve their qualification strength and credit – even if they have student loans.

  • Consistent payments: The first is to lower their DTI by making consistent, on-time payments towards their student loans.


  • Save for a down payment: Buyers should plan for when they would like to purchase a home and build a budget around that timeline. Making a budget and planning early will set them up for success later when they begin house hunting.


  • Talk to a reputable lender: The best way for buyers to know what they qualify for and what they can afford is to talk to a reputable lender and begin the pre-approval process. There are many different loan types and programs available for buyers. Lenders are the best people to consult to determine which loan type is the best for the buyer’s financial situation, and what options are available to improve their DTI and credit to qualify.

Questions? Contact us to discuss your student debt and loan options available to you at (925) 855-4491 or [email protected]

Take the next step towards finding your best mortgage.

Get your personalized instant rate quote:

    Get your instant rate quote.
    • No commitment
    • No impact on your credit score
    • No documents required
    You are less than 60 seconds away from your quote.

    Resume from where you left off. No obligations.