Can buyers with student loans afford a home?
Many college graduates who are considering whether or not now is the time to buy a home, are usually stuck with one overbearing question. How is my student loan debt going to affect how qualified or not I am to buy. For some people student loan debt will stick with them for over a decade until they are able to pay it off.
According to a recent home study, graduates of four-year colleges who took out student loans are estimated to spend more than a decade saving up for a 20% down payment on their own home. In the same study it was found that graduates without a college debt take half as much time to save up for the 20% down payment. The debt-free grads can save more, an average of $350 a month, than those paying off those college loans allowing them to put much more money aside.
More than half of college-educated millennials surveyed had student debt that resulted in a $410 average monthly bill. Usually at the end of the month after all is paid for they will usually not put any aside in savings. Keep in mind that they also earn about $22,600 more annually than those who don’t have those degrees on their resumes. This flow of money makes it hard for loan paying college graduates to be able to buy a house sooner, but when they go to buy they can afford much more.
For many college graduates as long as they put money aside, and don’t live as frivolously as most do, then it is not unfathomable to be able to afford a decent mortgage payment five years out of college. Unfortunately, some millennials have trouble saving much making it an average of ten years after college graduation before they can purchase their first home.