Hey there, my fellow Canadian students and future homeowners! I'm Joanne Bouley with Remax Fairlane Realty on the Truro Home Team in Truro Nova Scotia, and I'm here to talk about the not-so-funny reality of student loan debt and its impact on getting a mortgage.

We all know that education is an investment in our future, but let's be real, it's not cheap. On average, full-time undergraduate students paid $6,693 for tuition in the 2021/2022 academic year. And if you're pursuing a graduate degree, you can expect to pay an average of $7,742 per academic year. That's a lot of dough! And once you're done with school, you're left with the not-so-funny task of paying off those loans for the next decade or more.

Now, let's say you also have dreams of owning a home. Is it even possible to get a mortgage with all that student loan debt weighing you down? The good news is that it is possible, but your debt-to-income ratio and mortgage affordability will definitely be affected. So, let's dive into the nitty-gritty details.

First off, your debt-to-income ratio is a percentage of your gross monthly income that goes towards making monthly debt payments. This ratio is used by lenders to determine your borrowing risk. If you have a low ratio, it means you have sufficient income and a good balance between income and debt. But if you have a high ratio, it means you don't have enough income or you have too much debt. And let's face it, lenders want to see low debt-to-income ratios before giving out mortgages to ensure they're not taking on too much risk.

When applying for a mortgage, lenders will look at two debt ratios. The first one is your Gross Debt Service Ratio (GDS), which represents the ratio of your income to the cost of your housing. This ratio is not usually affected by student loans. The second one is your Total Debt Service Ratio (TDS), which represents the ratio of your income to all your debt service requirements, including housing, credit card debt, and any other loans. And this is where your student loan debt comes into play.

Most lenders won't let you get a mortgage with a TDS greater than 44%. So, if your loan payments are too high or your income is too low, you won't be able to qualify. Bummer, right?

But wait, there's more! Student loan debt also affects your mortgage affordability, which is how much you can borrow based on your current income, debt, and living expenses. The more debt you have, the lower your mortgage affordability will be, meaning you'll be approved for a lower mortgage amount. And let's not forget about how student loan debt can impact your credit score. If you've been making payments on time, it can positively impact your score. But if you've been slacking, it can negatively impact your score and hurt your chances of getting approved for a mortgage.

So, what can you do to increase your chances of getting a mortgage with student loan debt? Here are a few tips:

• Pay off other debt: If you have other types of debt beyond your student loans, it's wise to pay them off as much as possible. Even small amounts of credit card debt can affect your debt-to-income ratio and your ability to get a mortgage. So, take care of them immediately to improve your mortgage affordability.
• Restructure your student loan: Debt ratios are based on monthly payments. By restructuring your student loan to extend payments over a longer period of time, you'll reduce your monthly obligations and positively impact your debt ratios. However, you'll pay more student loan interest over time, so try to pay it

Thanks for reading, and remember - I'm always here to help with any real estate needs. So don't be shy, give me a call and let's make those home-buying dreams a reality!