Are you getting ready to buy a house and wondering about how your student loans might be a problem? There's no need to worry because there are several ways to address the situation and come out with the home loan you need and want. But first, it's important to consider five concepts that directly impact your chances for homeownership, all of which are related to education debt. Here's a look at five key concepts you need to understand in order to get the home you want.

Common Homeownership Hurdles

For the vast majority of people getting ready to purchase a first or second home, the big question marks are income, credit, and savings (for a down payment). Student loans affect all three areas, which makes them a key part of the solution. Lenders look at how much money you have in terms of debt-to-income. They also check your credit scores at all the bureaus and ask about how you intend to cover the down payment. Having sufficient savings solves the down payment requirement, but credit scores and debt-to-income figures can be significantly affected by student debt obligations. Plus, if you're having to put every extra penny toward education loans, it's pretty hard to build up savings for a down payment.

How Student Debt Affect Your Credit

The debt-to-income ratio is a vital piece of your overall financial picture. It often counts you in or out for mortgage qualification. If you consolidate loans and end up with lower monthly payments, then you automatically improve the DTI ratio without having to earn more money, get a raise, or take on a second job. If you have missed student loan payments in the past, your credit might be negatively affected. Be careful to keep up with all obligations, both long-term and short-term.

Consolidation is an Effective Remedy

There's a very effective technique for improving your chance of qualifying for a mortgage. Do some quick research on how to take out a student loan consolidation. First, you'll have a chance to get a more favorable interest rate because your credit is probably better now than when you were a student. Second, better terms and lower monthly payments are usually part of the consolidation agreement. Finally, those lower monthly payments will make you more attractive to lenders who put a lot of weight on how much room you have in your budget.

Use the One-Year Method

If you're still having trouble qualifying for a mortgage even after doing a consolidation and cleaning up your scores, consider the one-year maneuver. That means taking one full year to cut expenses, work to increase your credit scores even more, pay off as much debt as possible (on student obligations as well), and save for a down payment.

How School Debt Helps You

Education loans do show up on bureau reports and while they can hurt you if you miss payments, they can help your scores if you pay on time. And when you consolidate, the new information will show up on reports about three to six months after you sign the new agreement.