There may be some options for you to get your student loans forgiven as a first-time homebuyer. It all depends on factors such as where you live or work, how much you earn, and the types of loans you have.
Can First-Time Homebuyers Get Student Loans Forgiven?
Currently, student loan forgiveness programs for first-time homebuyers exist at the state level. While there aren’t any federal options available, as of 2022, the Biden Administration and the U.S. Department of Urban Development are exploring ways to remove barriers to homeownership for those with student loans. In the past, FHA mortgage lenders were required to calculate a borrower’s monthly loan payment as 1% of their outstanding balance for loans that aren’t in repayment. This included borrowers who were in deferment or under an income-driven repayment (IDR) plan. Since newer rules remove this requirement, lenders are now able to use borrowers’ actual monthly loan payments, making approval easier. In addition, the Biden Administration has wiped away student loan debt for victims of forgery as well as for disabled veterans. Additionally, there are plans to resolve administrative issues that previously denied loan forgiveness to certain borrowers enrolled in an IDR plan. According to the U.S. Department of Education, this initiative will lead to student loan debt cancellation for at least 40,000 borrowers, who will eventually be eligible for Public Service Loan Forgiveness.
States Offering Special Student Loan Forgiveness Programs
First-time homebuyers aren’t the only ones eligible for certain state programs offering student loan forgiveness. Here’s a brief overview of the programs that currently exist in various states.
California
The California State Loan Repayment Program offers to pay up to $50,000 in student loans for doctors, dentists, dental hygienists, physicians, nurses, pharmacists, certified midwives, and mental health professionals. To qualify, you must work in the public sector or nonprofit in an area with a shortage of health care workers. The state also requires that you commit to at least two years of full-time or four years of part-time employment.
Delaware
Delaware offers the Delaware State Loan Repayment Program (SLRP). It awards anywhere between $30,000 to $100,000 to residents with advanced degrees in behavioral/mental health, dentistry, and medicine. To be eligible, you must work in a medically unserved area for at least two years on a full-time basis or four years part-time.
Georgia
The Georgia Board of Health Care Workforce (GBHCW) has several repayment assistance programs. These programs are intended for health care professionals in the state who work at least 40 hours per week in rural areas with populations of 50,000 or less. Lincoln, Monroe, and Polk are a few of the cities that qualify as a rural area.
Iowa
Iowa offers student loan repayment assistance programs for residents who work full-time in rural areas that need professionals in certain fields. It’s designed for doctors, teachers, health care workers, lawyers, veterinarians, and other health professionals. Through these programs, participants can have from $4,000 up to $200,000 of their federal student loans paid off, depending on the program.
Kansas
Kansas has student loan repayment assistance programs in its Rural Opportunity Zones, offered by the Kansas Department of Commerce. If you move to the state and work in a city such as Wallace, Rush, Franklin, or Pawnee for a qualifying employer, you can get a 100% personal income tax credit and up to $15,000 to repay your student loans over a five-year period.
Maine
Through the Opportunity Maine Tax Credit, you can get reimbursed for your student loan payments. To qualify, you must be a full-time resident of Maine and meet other criteria based on when you graduated.
Maryland
The SmartBuy 3.0 program in Maryland provides up to 15% of the purchase price of a home or $30,000 (whichever is less) to repay your student loans. To be eligible, you must live in the state, have a down payment of at least 5%, purchase a state-owned property, and have a minimum credit score of 720.
Michigan
If you’re a health care provider in a Health Professional Shortage Area in Michigan, you may secure up to $300,000 in student loan forgiveness. The program is for dentists, doctors, and mental health care providers. It requires you to work full-time for at least two years in a nonprofit health clinic in an area with a shortage of health care professionals.
Texas
There are a number of student loan repayment assistance programs in Texas. These include Nursing Faculty Loan Repayment Assistance Program, the Teach for Texas Loan Repayment Assistance Program, and the Texas Access to Justice Foundation’s Student Loan Repayment Assistance Program.
Other Ways To Get Loan Forgiveness
While these state programs are worth exploring, it’s a good idea to also look into the student loan forgiveness programs offered by the federal government, such as:
Public Service Forgiveness: Public Service Loan Forgiveness is for public service workers such as teachers, nurses, and firefighters. To qualify, you must be a qualified full-time employee at a government entity or nonprofit organization. You should also be participating in an income-driven repayment plan. Once you’ve made 120 qualifying payments, the remaining balance on your loans may be forgiven. Teacher Loan Forgiveness: Teacher Loan Forgiveness is a federal program for full-time teachers who work in low-income schools or educational service agencies. It was created to encourage teachers to work in areas with a shortage of qualified teachers. To be eligible, you must be considered a highly qualified teacher by the U.S. Department of Education and have federal student loans.
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