Student loan debt is making it harder for most college grads to become homeowners.
These often immense monthly bills are causing 71% of borrowers to delay buying a home – and more than half of them to put off that dream of homeownership by more than five years in order to save up for the down payment, according to a recent National Association of Realtors and SALT joint report. About 3,230 borrowers who made their student loan payments on time were surveyed in April for the report.
The burden of repaying the debt has led about four in 10 borrowers to postpone moving out of mom and dad’s house as a result.
Along with rent, a car payment and other large monthly expenses that can squeeze a household’s budget, paying a few hundred dollars every month on a student loan equates to thousands of dollars over several years that could otherwise go towards saving for a home purchase.
The most frustrated borrowers were those ages 26 through 35 and those with a towering $70,000 to $100,000 in debt, according to the report.
Someone who borrowed a lot of money to pay for school may also have a harder time qualifying for a mortgage. That’s because loan officers look at buyers’ income as well as their monthly debt payments such as credit card, car and student loans. If they’re too high, you’re not going to be able to borrow as much.
The burden isn’t just affecting those dreaming of buying their own homes. The debt is also making it harder for some existing homeowners to put their properties on the market and trade up to larger residences, according to the report. That means fewer more affordable homes on the market for first-time buyers.
