Student loan/installment debt (credit card, bank, FHA, fund)

[NM posts]

Oof. I'm about six months out from possibly buying a home, so I just got my credit report. I have no negatives on the report and pay on time for everything. The one bad thing: my student loan. Equifax does a debt to credit ratio and mine is...54%. Installment loans: 67% (this includes student loan, car payment). Revolving debt: 21% (one credit card I'd like to pay off within six months - if not, get it as low as possible while also saving more for down payment, closing costs).

I actually thought I was doing ok until I saw that 54%. Yikes. You think I'm out of luck? I probably won't make a huge or even medium dent in this student loan anytime soon.

I plan to go with an FHA loan (since I'm so focused on also paying down debt, I won't have 20% saved for a down payment). Home priced way below what the bank will tell me I can afford. Good, stable income I don't want to report here. Single buyer. Want small house with nice yard

I hate that student loan. I'm not even working in that field!

[msdmoney]

I would pay down your debts before taking out any new debt, regardless of what the banks are willing to loan you.

[Lacerta]

I assume from the context that that 54% is the ratio between your total available credit and your used credit. That is very misleading on a student loan, since the "maxixum available credit" is probably your high balance, since it isn't a credit line that you can borrow against. So when you first get a student loan, it would be 100% usage. It would gradually go down as you pay it off.

I don't think this ratio is really that important. Your debt to income ratio is much more important. And the percentage your mortgage will be of your income is important.

I wouldn't worry much about your debt to credit ratio when it comes to student loans. Your revolving credit ratio is decent.

The question is, will your mortgage be small enough that you can pay it, and still continue to pay off your debt faster than paying the minimums, or else paying the minimums and saving/investing for an emergency fund or for retirement?

[NM posts]

Thanks! My debt to income ratio is extremely good actually - I'm renting a very cheap house right now so have been able to pay down a good deal. The house is creepy but you do what you have to do (it does really make me want to buy, though). That makes sense about the 100% usage. That's exactly the situation.

My mortgage will be because I'm going to be careful to do that. I don't want to buy a cheap money pit but I'd much rather buy a smaller house (I'm single, no kids) than get myself into trouble in that way. I'll likely stay in an area with lower housing costs for this reason. If it works out that I still need to rent I suppose I still will...but ugh, I've extended that for two years in a row (I was going to buy last year but my company went through a merger and I felt I better not buy...wasn't sure about my job).

Msdmoney - I have been paying them down - ideally I would have that last credit card paid off before looking for a mortgage, but the timing isn't there in terms of when my lease ends. I'll see where I'm at in a few months. It would have already been paid off but I've been trying to save at the same time, sigh.