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A common source of confusion is how one can pay both their student loans and buy a home. It seems an impossible task, and it leaves graduates wondering which one should be the top priority. Let us take a look at both options and decide which one is best.

Assess your situation

Before making any new moves, you should always assess your current situation. A big factor in mortgage loan approvals is debt-to-income (DTI) ratio, so many people fear that their student loans will hurt their DTI. This is not necessarily true as sometimes it depends more on the type of debt than how much is actually present. Though student loans are debt, some lenders tend not to look as harshly on them as other debts.

If you are not in default on your student loans, you may still have a good chance for approval with some lenders. With that fact in mind, before you start pushing yourself to pay off your student loans, look at any other debt you have, such as credit cards. Is the interest higher on your other debt than it is on your student loans? If so, paying your other debt off first is a wiser move as it saves money. Once you have paid those off, there is more cash to pay on student loans or save for a down payment.

Can I do both?

The short answer is that you can pay off your student loans and save for a down payment simultaneously. The question is whether you are prepared and willing to put in the work to do both. If you are willing to put in the effort, it is more than possible. There is, however, one other factor to consider: Buying a home goes beyond saving for the down payment. Can you afford both a mortgage payment and your student loan payments?

You do not want to lose your home due to non-payment, so do the math first. If you feel that you can handle both and want to work on both goals simultaneously, the following are some ways you can do so.

Determine your timeline

When do you hope to buy your new home? One year from now? Five years from now? Your timeline is important because it tells you how many changes you will need to make. Buying a home in one year will require more drastic changes than buying a home in five years.

Take a look at your budget

There are usually several things that can be cut down or from a budget without suffering. For instance, since you can now watch your favorite shows online, cable is no longer necessary for visual entertainment. If you stop for coffee every morning, start making it at home instead. And cutting just half of your current fast food out can make a big difference to your wallet and your health.

Consider, too, your current living arrangements. Is your monthly rent high? If so, consider moving to a cheaper place. Living in a smaller or less than desirable place may seem awful now, but that will make moving into your dream home even sweeter. The money you save on rent can be split between your student loans and your down payment.

Look into different mortgage lenders

Do not settle for the first loan you come across. Mortgages come with different requirements and interest rates. Some require a 20% down payment while others require much less. Look into FHA loans and see if you qualify. They accept varying credit scores, have low-interest rates, and generally require a much lower down payment. By shopping around, you might find that saving for your down payment can be done without affecting your student loan payments.

Extra cash is king

After you have cut your budget down to a minimum, start adding to your current income. Consider a second, part-time job a couple of nights each week. Waiting tables on the weekends can provide a very lucrative bump in your savings.

Try turning your skills into extra cash with a side hustle, such as yard work, house cleaning, babysitting, or even writing resumes. Someone out there will pay for your skills, either because they do not have the time or the ability to do it themselves.

There are mobile apps that can help you net a little extra, as well. Shopping apps such as Ibotta and Shopkick pay you for scanning receipts and items. Ebates gets you cashback on eligible items that you purchase anyway. The number of apps that can bring in a little extra is astounding. None of them will make you rich, but all of them can push you closer to your goals.

Lastly, do not overlook one-time or periodic cash flows. Yard sales and garage sales are excellent ways to clear out stuff that you do not want in your new home anyway while making extra money. If you receive any bonuses, holiday cash, or a tax refund, put half toward your student loans and half toward your down payment. Activities such as these can make a difference in your goal progress.

Whether you decide to pay your student loans off first, save for a down payment first or do both simultaneously depends mostly on your priorities and your finances. As you consider which move to make, do not forget to consider your future financial state, as well. The wisest choice will be one that will be practical now without hurting your future.