Buying your first home is a huge milestone, but if you’ve got a student loan hanging over you, you might be wondering, can I still get a mortgage? The good news is that having a student loan doesn’t automatically mean you can’t buy a home. But it does play a role in how much you can borrow and what mortgage deals you’ll have access to.
Lenders look at a range of factors when deciding whether to approve your mortgage. While student loans aren’t seen as harshly as other types of debt, they can still affect your borrowing potential. In this guide, I’ll walk you through how student loans impact mortgage applications, what lenders look for, and what you can do to boost your chances of getting approved.
Do Mortgage Lenders Care About Student Loans?
Unlike personal loans or credit cards, student loans are considered lower risk by most lenders. That’s because repayments come straight out of your salary and are based on how much you earn rather than a fixed monthly amount. If you earn below a certain threshold, you won’t have to pay anything at all.
That being said, lenders still take student loan repayments into account when working out how much you can afford to borrow. If you’re thinking, how much can I borrow if I have a student loan?, your monthly repayments will play a part in that calculation.
What Do Lenders Look At?
- Debt-to-Income Ratio (DTI) – This is how much debt you have compared to your income. The lower it is, the better your chances of getting approved.
- Monthly Outgoings – Lenders will check all your regular expenses, including rent, bills, and any debts, to see how much you can afford in mortgage payments.
- Credit History – A good credit score can help you get a better mortgage deal. Late or missed payments on other debts can hurt your chances.
- Employment Stability – If you’ve got a steady job and regular income, lenders will be more comfortable approving your mortgage.
Will My Student Loan Reduce How Much I Can Borrow?
Student loan repayments aren’t the same as other types of debt because they’re linked to your income. The more you earn, the more you pay. Lenders will factor this in when working out your affordability.
For example, if you’re earning £35,000 a year and your student loan repayment rate is 9% on earnings over £27,295, you’d be paying around £57 a month towards your loan. If you’re asking, will my student loan reduce my mortgage borrowing power?, the answer is yes, but not as much as things like credit card debt or personal loans.
Does a Student Loan Affect My Credit Score?
Unlike other debts, student loans don’t show up on your credit report the same way. That means they don’t directly impact your credit score. However, lenders will still ask about them when assessing your finances.
If you’re wondering, does my student loan show up on my credit report for a mortgage?, the answer is no—but lenders will still take it into account when working out your affordability.
How Much Can I Borrow If I Have a Student Loan?
The amount you can borrow depends on a few key things: your income, your credit history, and your financial commitments. While student loan repayments can reduce your affordability slightly, they’re usually not a deal-breaker.
Lenders typically offer between 4 to 4.5 times your annual salary. If student loan repayments reduce your disposable income, that figure might be slightly lower.
Example Calculation
- Applicant 1: Earns £30,000 per year with no debt
- Likely mortgage amount: £120,000 – £135,000
- Applicant 2: Earns £30,000 per year with student loan repayments of £40 per month
- Likely mortgage amount: Slightly lower, around £118,000 – £132,000
As you can see, student loans have an impact, but it’s not a huge one.
How Can I Improve My Chances of Getting a Mortgage with a Student Loan?
1. Reduce Other Debts
If you’re looking for tips for getting a mortgage with a student loan, cutting down other debts is a great start. Pay off credit card balances or personal loans before applying to improve your affordability.
2. Boost Your Credit Score
A strong credit score can help you get a better mortgage deal. Pay all your bills on time, don’t max out your credit cards, and check your credit report for errors.
3. Save for a Bigger Deposit
You might be asking, how much deposit do I need if I have a student loan? A bigger deposit can help offset any affordability concerns and get you access to better mortgage rates.
4. Increase Your Income
Easier said than done, but if you can boost your salary—whether through a promotion, a second job, or freelancing—you’ll improve your affordability.
5. Work with a Mortgage Broker
At Mortgage Bridge, we specialise in helping first-time buyers, even if they have student loans or bad credit. A mortgage broker can match you with lenders who are more likely to approve your application.
What Are the Best Mortgage Options for First-Time Buyers with a Student Loan?
Are There Any First-Time Buyer Schemes That Can Help?
Yes! There are schemes designed to help first-time buyers get on the property ladder. These can lower the deposit you need and make mortgages more affordable.
Can I Get a Guarantor Mortgage If I Have a Student Loan?
If affordability is a concern, a guarantor mortgage might be a good option. This means a family member agrees to cover the mortgage payments if you can’t.
Is a Joint Mortgage a Good Idea If I Have a Student Loan?
Buying with a partner or family member can increase your affordability by combining incomes, making it easier to secure a mortgage.
Final Thoughts: Should I Worry About My Student Loan When Applying for a Mortgage?
If you’re still thinking, can a student loan stop me from getting a mortgage?, the simple answer is no. It might slightly reduce how much you can borrow, but it won’t stop you from getting approved.
The key is to manage your finances well, improve your credit score, and work with a mortgage broker to find the best deal. At Mortgage Bridge, we help first-time buyers like you get on the property ladder, even if you have student loan debt.
Want to know your mortgage options? Get in touch with us today—we’re here to help!