Myth busted: Yes, you can buy a house while you’re a student

This column was republished in the “Home” section of The Virginian-Pilot

One of the biggest misconceptions about homebuying is that you can’t go through the process while in school (e.g.: college).

Well, I have good news: That’s not true!

Did you know you can claim education as “employment” on a mortgage application? The lender needs to see stable work history, but education can serve in place of a full-time job and often satisfy the requirement.

Here are several common questions clients ask me and what I tell them:

I am in a graduate school program and will finish in the spring. I have a job lined up post-graduation. Can I get a mortgage?

Yes, and the employment (the job you will begin after graduation) must be a salaried position (nonfluctuating) and the company cannot be owned by a family member. You must also start your employment within 60 days of closing on the loan. Also, the lender will require you to provide additional documentation (e.g.: an employment offer letter or employment contract that is fully executed and noncontingent).

I have been in school for the past couple of years and don’t have the required “two-year work history” needed for a mortgage. Do I qualify?Lenders require a two-year work history because they want, in part, to see you have stability in your employment and income. If you are new to a job (less than two years’ experience), because you have been in school or training, the education can factor into your two-year work history. The lender will need to see transcripts or a copy of certification/diploma.

I have student loans. Will they disqualify me from receiving a loan?

If your student loan is in a deferment period and there is no payment information reported on your credit report, the lender will use 1 percent of the total loan balance as part of your debt-to-income ratio – that’s your total monthly debt plus the proposed mortgage payment in relation to your monthly income. If you want the actual payments to be considered, you can provide your loan agreement information.

Can my parents be listed on the mortgage with me?

In some cases, parents want to help their child qualify for a loan by being a nonoccupant co-borrower. To do so, parents are responsible for credit, income and asset documentation as well as mortgage payments – just like the borrower. The down payments requirements are between 3.5 percent to 10 percent.

Since the housing crash of the mid 2000s, the mortgage process has become tougher and tougher on first-time homebuyers. It should be a relief to know you can qualify for a loan while in school as long as you have strong credit, money for a down payment and a clear ability to make your monthly mortgage payments.

So, yes, college students,a mortgage is possible in 2017 and beyond.