How to get approved for a mortgage even if you still have student loans

Cross Timbers Edition: Stephenville, Granbury, Hamilton, Brownwood, Fort Worth, including all nearby counties and towns.

Buying your first home in the Cross Timbers doesn’t have to wait until your student loans are gone. Lenders approve thousands of first-time buyers with outstanding student debt every year. The key is understanding how mortgages treat student loans, choosing the right loan type, and using Texas assistance programs that keep your monthly payment and cash-to-close affordable.

Can you buy a house if you still have student loans?

Yes. Lenders focus on three things:

1. Debt-to-Income (DTI) ratio: your monthly debts (including a student-loan payment) compared to gross income.
2. Credit profile: score, history, and responsible use of credit.
3. Funds to close: down payment, closing costs, and reserves (which you can often cover with assistance programs).

You don’t need the loans paid off—you need a file that fits the guidelines.

How lenders count student loans (plain English)

Different mortgages handle student loans differently. The headline rules most buyers need to know:

• Conventional (Fannie Mae/Freddie Mac): If you’re on an income-driven repayment (IDR) plan, lenders can often use your documented IDR payment in DTI. In some cases, even a documented $0 IDR payment can be acceptable with proper paperwork. If there’s no documented payment, some lenders must assume a small calculated payment based on your balance.
• FHA: Generally uses your actual documented payment when one is reported; if none is reported, lenders may have to use a calculated payment.
• VA (for eligible Veterans/Service Members): Deferred student loans may be excluded from DTI if they won’t be due for a while; otherwise, the lender uses either your documented payment or a calculated amount.
• USDA (great for many Cross Timbers addresses): Usually uses the reported payment; if nothing is reported, lenders apply a small calculated amount.

Bottom line: If your credit report shows a real, documented payment that reflects your IDR, you’ll usually qualify for more home than if the report shows no payment and the lender has to estimate one. Before you apply, make sure your servicer letter and credit report show your current payment.

A 7-step approval plan for buyers with student loans

1. Tune up your IDR: If you’re eligible, (re)certify an income-driven repayment plan so your student-loan payment is documented and as low as allowed.
2. Pick the right mortgage lane: If your IDR payment will be very low or $0 (and you can document it), Conventional can be friendlier. If credit is lighter, FHA is flexible. If you’re eligible, VA can be extremely generous on ratios. USDA shines in rural/suburban Cross Timbers locations with zero-down.
3. Reduce other debts first: Paying down credit cards can improve both your DTI and credit score—a double win for approval and interest rate.
4. Avoid new loans for 60–90 days before application (cars, furniture, BNPL).
5. Use down-payment assistance to keep cash in the bank and strengthen your approval.
6. Document, document, document: Save your student-loan statements/servicer letters, pay stubs (30 days), W-2/1099s (2 years), and bank statements (2 months).
7. Work with a local lender who knows Texas programs and can layer assistance correctly.

Texas first-time buyer programs you can use in Cross Timbers

These are statewide or local and work with participating lenders. Income, price, and education requirements apply.

• TSAHC (Texas State Affordable Housing Corporation) – Home Sweet Texas and Homes for Texas Heroes (teachers, police, firefighters/EMS, veterans, nurses, etc.). Offers down-payment/closing-cost help (grant or forgivable second) and an optional Mortgage Credit Certificate (MCC) for an ongoing federal income-tax credit on mortgage interest.
• TDHCA (Texas Department of Housing & Community Affairs) – My First Texas Home and My Choice Texas Home, plus MCCs. Statewide assistance paired with 30-year fixed mortgages.
• USDA Guaranteed Loan (Zero-Down) – Available in many Stephenville, Dublin, Hamilton, Comanche, Brownwood, and Granbury-area locations outside dense city limits. Great for buyers who want $0 down with sensible income limits.
• City of Fort Worth – Homebuyer Assistance Program (HAP) – For purchases inside Fort Worth city limits; offers local down-payment/closing-cost help with buyer education.
• Habitat for Humanity (local affiliates) – Alternative pathway with affordable financing and buyer education (active around Erath, Hood, and Brown counties).

Pro tip: You can sometimes stack a Texas MCC with down-payment assistance to lower both your upfront cash and your after-tax monthly cost. Program “layering” rules vary—your lender will confirm what can be combined in your county.

What counts as a “first-time buyer”?

Typically, it means you haven’t owned a home in the past 3 years. Some programs make exceptions for certain life events or target areas.

Where these programs fit around Cross Timbers

• Stephenville, Dublin, Hamilton, Comanche, Brownwood: Many addresses qualify for USDA; TSAHC/TDHCA are statewide and can be layered.
• Granbury/Hood County: USDA may apply outside more developed areas; TSAHC/TDHCA are common here, too.
• Fort Worth & edge suburbs: USDA won’t apply inside the city, but Fort Worth HAP + TSAHC/TDHCA can work well.

Common questions (fast answers)

• Will my student loans disqualify me? Not if your DTI fits. Use IDR (with documentation) and pick the mortgage type that treats your loans most favorably.
• Do I need 20% down? No. USDA = 0% down, VA = 0% down (if eligible), FHA = low down, Conventional has 3% down options for first-timers, and Texas programs can cover part of your down and/or closing costs.
• What credit score do I need? It varies by lender/program. Higher scores unlock better pricing and lower MI, but buyers with moderate credit purchase homes every day with the right structure and documentation.

Local, boots-on-the-ground help

At Preferred Properties of Texas, we work daily with lenders approved for TSAHC, TDHCA, USDA, VA, and Fort Worth HAP. We’ll help you:

• identify which programs you qualify for in Erath, Hood, Hamilton, Comanche, Brown, Parker, and neighboring counties,
• match you to a lender who understands student-loan guidelines, and
• Find homes that fit both your budget and the program boundaries.

Ready to get started? Reach out, and we’ll map your approval plan in one conversation.

Preferred Properties of Texas 254-965-7775