Can You Use Student Loans to Pay Your Mortgage?

In most cases, you cannot use your student loans to pay mortgage payments. There are a number of reasons why you will be restricted against doing this. However, if you owned your home before taking on the cost of attending college, you may be eligible. This will mostly apply to graduate students who got their mortgage approval prior to quitting a job to attend school full time.

Government Student Loans

Government student loans are given on a semester by semester basis, and the loan limits are very low. You will only be able to borrow a portion of the cost of your tuition each semester, leaving little money for other expenses. Furthermore, these loans go directly to paying tuition. You will not have the cash in your pocket to spend the funds how you wish. If you spend the funds in a way not designated by the loan program, you may lose your funding all together.

Tuition Loans

Private tuition loans are usually distributed in much the same way as government loans. While you may not have to apply each semester for the loan, you will still likely receive your financing in small batches rather than a lump sum. The size of the batch will be directly determined by how much it costs you to attend school, not how much it costs you to meet mortgage payments while attending school. Using your funds for books and classroom expenses may be permitted. However, using the same funds for a mortgage is not likely possible and may cause your lender to stop providing you with the loan money.

Living Expense Loans

There are some loan programs you can use while attending school that will help with the cost of living. These loans are usually available to students pursuing advanced degrees, such as PhDs and MDs. While undergraduate and masters students may receive living expense loans, the loan limits will be lower if there is an option to live on campus or rent a place for cheaper. Loans that will cover mortgage payments are usually dispersed only to families or older individuals who have the option to work, have previously worked or are potentially completing a residency program while finishing a degree.

Getting Student Loans with a Mortgage ... and Visa Versa

The problem for most students who are seeking funds for a mortgage is getting approval for two large loans at once. If you are a student using loans to pay for your tuition, you will not be an attractive candidate to a mortgage lender. If you are a person with an expensive mortgage payment each month, you will not be an attractive borrower to a student loan lender. The only exception, again, is those students who are older and are getting an advanced degree. Degrees that promise immediate salaries are easier to fund because lenders can expect to receive loan payments right after graduation. For this reason, MD candidates are usually very attractive borrowers, and they may be able to carry a student and mortgage loan at once.

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