You’re ready to buy a home, but you’re also paying back federal or private student loans. Will this make it more difficult to qualify for a mortgage?

Yes. But that doesn’t mean qualifying for a mortgage while paying off student loans is impossible. Here’s what you need to understand before starting the home buying process.

Debt-to-income ratio

When determining whether to approve you for a mortgage, lenders look at something called your debt-to-income ratio. This ratio shows how much of your gross monthly income — your income before taxes are taken out — your monthly debts eat up. If your debt-to-income ratio is too high, lenders won’t approve you for a mortgage because they worry that you won’t have enough money each month to handle this significant payment.

It’s important to remember that mortgage lenders aren’t as concerned about your total student loan debt as they are about the size of your monthly student loan payments. Lenders typically want all of your monthly debts, including your new mortgage payment, to equal no more than 43 percent of your gross monthly income. So, if your total debts — again, including that new mortgage payment — are at or under that percentage, your odds of qualifying for a mortgage loan are higher.

Your student loan payments are considered part of your monthly debt by lenders. For example, if you are paying $300 a month on your student loans, your lender will count that amount when calculating your debt-to-income ratio. If that $300 payment pushes your debt-to-income ratio past 43 percent, you might not be able to qualify for a mortgage.

A deferment won’t help

Your student loan might be in deferment while you are applying for a mortgage, meaning you won’t have to start making payments on it for six to 12 months. You might think this will help your debt-to-income ratio. After all, when you’re applying for your mortgage, you aren’t making those student loan payments.

But this isn’t the case. Lenders will still count your student loan debt against you. That’s because lenders know that long before you pay off your mortgage, you’ll have to eventually start making those monthly student loan payments. Lenders don’t want your mortgage payment…