Stricter rules for qualifying for mortgages hurts those with student loan debt in two ways. The 2014 guideline of no more than 43% debt-to-income now includes all debt, not just mortgages. Plus, 12% of those with student loans are 90 days delinquent, which hurts their credit scores and ability to qualify. However, even those who are current on their student loan have lower credit scores.
Outstanding student loan debt has grown from around $375 billion in 2005 to over $1.1 trillion today to become the second largest outstanding category of debt. The first-time home buyer age cohort bears a disproportionate share of this burden – almost 60% of the outstanding student loan debt is owed by the under 39 age group.
Me, I think a 43% DTI is insanely high, leaving little margin for error for emergencies. Yet even that is unattainable for too many of those with student debt who want to buy their first home.