Student loans are one of the most common reasons first-time buyers assume they can't buy yet. Most of the time, that's not true. What matters is how your loans show up in the math lenders use, and the federal rules for student loan repayment changed this year.

What changed on July 1, 2026

Federal legislation passed in 2025 reshaped student loan repayment starting July 1, 2026:

  • New loans taken out after that date have two repayment choices: a revamped standard plan and a new income-based Repayment Assistance Plan (RAP).
  • Existing borrowers with only older loans generally keep access to the standard, graduated and extended plans.
  • Some older income-driven plans are being phased out, with certain plans ending by July 1, 2028. Borrowers who don't choose a new plan when required may be moved into one automatically.

The details depend on when you borrowed and what plan you're on, so check with your loan servicer.

Why your monthly payment matters

When you apply for a mortgage, lenders calculate your debt-to-income ratio (DTI): your monthly debt payments divided by your gross monthly income. Your student loan payment is part of that. A lower qualifying payment can mean a meaningfully larger home budget. A plan change that raises your payment can shrink it.

How each loan program counts student loans

This is where it gets technical, and where a good lender earns their keep. In general:

  • Conventional (Fannie Mae): Lenders usually use the payment on your credit report. If there's no payment listed, they can use 1% of the balance, a documented payment from your servicer, or in some cases a documented $0 income-driven payment.
  • FHA: If the credit report shows $0, FHA generally uses 0.5% of the balance as the monthly payment.
  • VA and USDA: Each has its own calculation, including how deferred loans are treated.

Guidelines get updated, so I always check the current rules for your specific loan. The right program for a buyer with large student loans isn't always the obvious one.

What to do before you apply

  • Log in to your servicer and write down your plan, your current monthly payment and your balance.
  • Pull your credit report and make sure the payment listed matches what you actually pay.
  • Don't change plans on your own right before applying. Talk to your lender first so we can see how each option affects your approval.
  • Keep paying on time. Late student loan payments can hurt your credit score quickly.

I've helped a lot of buyers with student loans get into homes they were told they couldn't afford. Send me your servicer details and I'll show you how your loans will be counted and which program gives you the most room.