My husband and I are planning to buy a house in the next 12-18 months. I have over $100k in student loans (both federal and private). I feel stuck trying to decide if I should use the extra $1,000 we have each month to save for a house down payment or pay off my loans faster.
Right now, I’m thinking of splitting it—$500 toward the loans and $500 into savings. My husband is also saving for the house. Does anyone have advice or experience with buying a house while carrying big student loans? Is it better to focus fully on paying off debt first? Thanks!
I graduated with $50k in student loans and took on other debts like a car loan and credit cards. I thought I was doing okay until I lost my job and faced health issues. I had to sell my house to pay everything off, but now I’m debt-free and working again. It’s a relief not to worry about bills. There will always be houses to buy, but peace of mind is worth more.
Think about the cost of houses you’re looking at and how much you’ll need for a down payment. Are you planning to use an FHA loan? You’ll also need to account for moving costs, repairs, and an emergency fund. Once those are covered, it’s a good idea to pay off your student loans as quickly as possible to reduce stress later.
@Campbell
We’re looking at a $350k house and planning to save for an 8-10% down payment with an extra $15k for housing expenses. We’re leaning toward an FHA loan since we’re first-time buyers.
I was in a similar situation years ago. We had student loans, some other debt, and decided to buy a house. We ended up selling it later to pay everything off, rented for a few years, and saved for a solid down payment.
The stress relief from being debt-free was incredible. Now we live debt-free, pay off our credit cards monthly, and save for big purchases. If you can save enough for a 15- or 20-year mortgage with low debt, the savings in interest will be worth it.
When applying for a mortgage, lenders often calculate student loan payments as 1% of the total loan balance. So, even if your actual payment is lower, they may assume a higher amount for qualification purposes.
Make sure to save for emergencies before buying a house. Unexpected repairs like an HVAC replacement can cost thousands. I’ve been there, and even with insurance, it was a big out-of-pocket expense. It’s better to be prepared.
Depending on your loan rates, it might be worth saving in a high-yield account and paying the loans down slowly while you prioritize buying a house. It’s also a good idea to consult a mortgage broker to see how your student loans will affect your mortgage application.
If you’re disciplined with money, you can balance saving and paying off debt. If not, it’s better to stick to a simple plan like the Dave Ramsey method to get rid of debt first.