Joel DyckReal Broker SK Ltd.
Saskatoon · From the topic map

Should I pay off my student loans before buying a house?

Not necessarily. A lender qualifying a Saskatoon mortgage application looks at your total debt service ratio, which weighs your student loan payment against your income alongside the new mortgage, so a loan with a low required payment may barely affect what you can borrow.

What matters most is the size of your minimum required student loan payment relative to your income, not the total balance owing, since CMHC's insured lending guidelines weigh the payment, not the balance. A large balance on a long repayment term with a small monthly payment affects your qualifying ratio far less than a smaller balance on an aggressive short-term repayment plan.

Diverting savings to pay off a low-payment student loan instead of building your down payment can actually work against you, since the minimum down payment under federal insurance rules is fixed at 5 percent on the first $500,000 of the purchase price regardless of how little other debt you carry.

Run the numbers with a lender before deciding, since the right answer depends on your specific interest rate and payment structure. Get your hand-reviewed valuation from Joel Dyck.

Get your hand-reviewed valuation from Joel Dyck.

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