Zillow: Student Loans, Medical Debt Roadblocks To Mortgages

Student loans, medical bills hamper home ownership

New data released by Zillow reveals that medical debt and student loans are two of the biggest obstacles facing aspiring home buyers.

The 4th annual Zillow Group Report on Consumer Housing Trends found that homebuyers with medical debt are more likely to be denied a mortgage, while those with student loan debt more often put off buying.

According to the report, more than two-thirds of renters have some form of debt (credit cards, student loans, medical bills), with about a quarter of renters and homebuyers admitting that their debt caused them to be denied either a rental agreement or a mortgage at some point. In addition, nearly two-thirds of renters and 44 percent of homeowners with medical debt said they were unable to cover an unforeseen $1,000 expense.

The data also showed that half of renters and 39 percent of buyers said student debt led them to delay buying a home. And once they are ready, it impacts how much they are able to put down. Two-thirds of buyers with any kind of debt put down less than 20 percent, compared with 40 percent of buyers without debt. That is even higher (76 percent) for buyers with student debt.

“When we focus on low unemployment and the strong economy, we often forget that in many ways the rising costs of life can erode most of those gains,” Skylar Olsen, Zillow’s director of economic research, said in a press release. “Health care has never been more expensive. Getting a college degree, a path more likely to lead to economic success for those able to get through it, has never been more expensive. U.S. housing values and rents have never been more expensive. While incomes, both at the high and low end, are growing, the pace hasn’t kept up with those crucial life expenses. That’s fact and Americans are feeling it.”