Buy a House with Student Loans? Here's How (2026)

As a recent graduate, you might be wondering if it's possible to buy a house while still managing your student loan debt. This is a common concern among Australians who are eager to own their first home but are unsure if their existing liabilities will allow them to secure a mortgage. The good news is that purchasing a house with student loan debt is indeed possible, and with the right strategy and guidance, you can turn your homeownership dreams into reality.

Understanding Buying a House with Student Loan Debt

Before diving into how you can buy a house while carrying student loan debt, it's important to understand how lenders view debt. Student loans are considered a form of debt that can impact your borrowing capacity. Lenders will look at your debt-to-income ratio (DTI) to assess your ability to take on additional debt. This ratio is calculated by dividing your total monthly debt payments by your gross monthly income.

In Australia, many lenders prefer a DTI ratio of below 30%. However, having a student loan doesn't automatically disqualify you from obtaining a mortgage. Lenders are more interested in your overall financial health, including your credit score, employment history, and savings.

Current Market Conditions and Mortgage Options

As of 2026, the Australian housing market continues to be competitive. Interest rates for home loans can range from 6.49% to 12%, depending on the lender and your financial profile. It's crucial to explore different mortgage products and find one that suits your needs. Here’s a comparison of some mortgage options available:

Esteb and Co, with access to over 83 lenders, can help you navigate these options to find the best deal tailored to your situation.

Steps to Buy a House with Student Loan Debt

Here’s a step-by-step guide to help you on your journey to homeownership:

1. Assess Your Financial Situation: Calculate your DTI ratio and understand your credit score. This will give you a clear picture of your financial standing.
2. Improve Your Credit Score: Pay off outstanding debts and keep credit card balances low to improve your creditworthiness.
3. Save for a Deposit: Aim for at least a 20% deposit to avoid Lenders Mortgage Insurance (LMI), which can add to your costs.
4. Get Pre-Approval: This will give you a better idea of how much you can borrow and show sellers that you're a serious buyer.
5. Consult a Mortgage Broker: A broker, like Esteb and Co, can provide expert advice and access to a wide range of lenders to find the most suitable mortgage for you.
6. Choose the Right Property: Consider factors like location, size, and future growth potential.
7. Finalise Your Mortgage: Once you find a property, work with your broker to finalise your mortgage and complete the purchase.

Tips and Considerations

Here are some expert tips to keep in mind:

• Budget Wisely: Factor in all costs associated with buying a home, including stamp duty, conveyancing fees, and moving expenses.
• Consider Loan Features: Look for loan features that can provide flexibility, such as offset accounts or the ability to make extra repayments.
• Stay Informed: Keep up to date with market trends and interest rate changes to make informed decisions.
• Be Realistic: Set a realistic budget for your home purchase and stick to it, considering both your current and future financial situation.
• Plan for the Future: Consider your long-term goals and how owning a home fits into your financial plan.

Frequently Asked Questions

1. Can I get a mortgage with student loan debt? Yes, you can. Lenders will assess your overall financial situation, including your DTI ratio and credit score.
2. Does my student loan affect my borrowing capacity? It can, as it contributes to your DTI ratio. However, responsible management of your student debt can mitigate its impact.
3. What is the minimum deposit required? While a 20% deposit is ideal to avoid LMI, some lenders offer options with as low as 5% deposit.
4. How can a mortgage broker help me? A broker can provide access to a wide range of lenders and help you find the best mortgage deal based on your financial profile.
5. Should I pay off my student loan before buying a house? It's not necessary, but paying down debt can improve your borrowing capacity and credit score.
6. What if interest rates rise after I buy a house? Consider a fixed-rate mortgage to lock in your interest rate and protect against future rate increases.