Can I get a mortgage with a student loan or bad credit? A first-time buyer reality check

UKCalc Editorial Team · Last reviewed: 25 September 2026 · Rates: 2026/27 tax year unless stated otherwise

Having a student loan, a low credit score or previous missed payments does not create one universal answer to whether you can get a mortgage.

There are really three separate questions: can you afford the repayments, does your application meet a lender's criteria, and is the mortgage sensible for your finances?

UKCalc can help you model borrowing, LTV and repayments. Where your circumstances are more complex, Habito by Monzo - Monzo's mortgage experts - provides fee-free mortgage advice and can help you understand lender criteria and compare available mortgage options. Habito does receive commission from lenders.

The important thing is not to confuse affordability with eligibility.

The three tests to make before applying for a mortgage

Test 1: Do the numbers work?

Start with income and regular commitments, including loans, credit cards, childcare and student-loan repayments. Then calculate the mortgage repayment at a realistic interest rate and ask whether it fits alongside everything else you need to pay. This is affordability.

Test 2: Does your application meet the lender's criteria?

A buyer might comfortably afford a particular monthly mortgage payment but still find that some lenders will not accept the application because of credit history or another aspect of the circumstances. Different lenders can assess missed payments, defaults, income patterns and other factors differently. This is lender eligibility.

Test 3: Does the mortgage make sense for you?

Passing a lender's affordability assessment does not automatically mean borrowing the maximum available is the right financial decision. Consider what you would have left each month, whether you could absorb higher costs, how secure your income is and whether you would retain an emergency buffer. This is your own financial resilience.

Does having a student loan stop you getting a mortgage?

No. Having a student loan does not by itself mean you cannot get a mortgage. But the student-loan repayment can affect affordability because it reduces the income available for other commitments.

For UK income-contingent student loans, the statutory repayment is based on earnings and the applicable repayment plan - not simply on the outstanding balance.

Three things are often confused. The outstanding balance is what you still owe. The monthly or pay-period repayment is what actually leaves your pay. Your credit history is separate again: GOV.UK states that student loans do not appear on credit reports and do not affect your credit score, but that lenders may consider them during affordability checks for other types of borrowing, such as a mortgage.

So a student loan will not sit on your credit file as a debt, and it is the repayment rather than the balance that a lender is likely to weigh when assessing what you can afford. How much weight it carries is a matter for each lender's own affordability assessment.

For the 2026/27 tax year, the annual repayment thresholds are:

• Plan 1: £26,900
• Plan 2: £29,385
• Plan 4: £33,795
• Plan 5: £25,000
• Postgraduate Loan: £21,000

Plans 1, 2, 4 and 5 generally deduct 9% of earnings above the applicable threshold. Postgraduate Loan repayments are 6% of earnings above the postgraduate threshold.

That means two borrowers earning the same amount and on the same repayment plan can have the same statutory deduction even if their outstanding student-loan balances are very different.

A worked example: £40,000 salary with a Plan 2 student loan

For an employee earning £40,000 a year with a Plan 2 student loan, the 2026/27 annual threshold is £29,385. Earnings above the threshold are £40,000 - £29,385 = £10,615. At 9%, that produces an illustrative annual repayment of £955.35, equivalent to roughly £79.61 a month when expressed as a simple annual average.

Actual payroll deductions are calculated by pay period and can vary with earnings, bonuses and payroll rounding, so the monthly figure is an illustration rather than a payslip prediction.

The mortgage point is that the regular repayment affects monthly cash flow. Whether the remaining student-loan balance is £10,000 or £40,000 does not, by itself, change the statutory repayment generated by the same income and plan. A lender can then apply its own affordability methodology.

What if you have a Postgraduate Loan as well?

A borrower can make repayments towards a postgraduate loan alongside an undergraduate-plan loan when earnings exceed the relevant thresholds. Before applying, check which plan or plans you have, what is actually being deducted from your pay, whether your income varies and how those deductions sit alongside your other commitments.

Can you get a mortgage with missed payments or defaults?

Potentially, but there is no single rule that produces the same answer from every lender. Previous missed payments, defaults and other adverse credit information can affect mortgage eligibility. How much they matter can depend on the lender's criteria, what happened, how significant it was, how recently it occurred and the wider financial position of the applicant.

A single historic missed payment and a recent unresolved default are not the same set of circumstances and should not be presented as though they automatically produce the same lending decision.

The FCA published CP26/18: Mortgage Rule Review - supporting first-time buyers and underserved consumers on 9 June 2026. The consultation, which included proposals concerning underserved consumers such as people with past credit difficulties and variable income, closed on 28 July 2026. As at 25 September 2026, the FCA has not yet published its Policy Statement and says it expects to publish feedback and a Policy Statement in the second half of 2026. These remain proposals and should not be treated as rules already in force.

Does a low credit score automatically mean your mortgage will be refused?

Not necessarily. A consumer credit score can be useful for understanding your credit record, but mortgage lenders make their own lending decisions and apply their own criteria. A strong credit history does not establish that a particular mortgage amount is affordable, while previous credit problems do not tell you, on their own, how every lender will assess an application.

One lender has declined me. What should I do next?

Start by understanding why. A decline might relate to affordability, credit history, the lender's own policy, the property or another part of the application. Avoid assuming either that one lender saying no means nobody will lend to you, or that repeatedly applying until somebody says yes will solve the issue.

Review your credit reports, income and commitments, check the information on your application and try to establish what caused the decline. Where the reason involves lender criteria or more complex circumstances, personalised mortgage advice may help you understand which options could be appropriate. It still cannot guarantee that another application will be accepted.

What should you do before applying?

1. Check your credit reports

Review the information held about you before a lender does. Look for anything you do not recognise and make sure your address and financial information are up to date with the relevant organisations. If there are genuine historic problems, understanding exactly what is recorded is more useful than relying solely on a headline credit score.

2. List your monthly commitments

• Student-loan repayments
• Personal loans
• Car finance
• Credit-card commitments
• Childcare
• Maintenance or other committed expenditure
• Other significant regular payments

3. Know your deposit and LTV

Calculate the deposit you can genuinely use after purchase costs and the LTV that would result. A larger deposit may change the products available, but do not leave yourself without sufficient cash simply to reach a particular LTV.

4. Model your borrowing range and mortgage repayment

Estimate a realistic borrowing range, then calculate the proposed mortgage at more than one interest rate. Don't ask only whether today's illustrative payment works; test what happens if the rate or other household costs are higher.

For buyers with credit issues, which products you are actually eligible for - and their total cost with fees - can matter more than the lowest advertised rate.

5. Gather evidence of your circumstances

Depending on the application, this might include income evidence, bank statements, deposit evidence and information about existing financial commitments.

How can a mortgage broker help if you have credit issues or have been refused?

A mortgage broker can be particularly useful where an application is not straightforward. If you have previous credit issues, part-time, variable or self-employed income, student-loan deductions, a gifted deposit or another circumstance that could be treated differently between lenders, a broker can help explain lender criteria and compare potentially suitable options.

Questions worth asking include:

• Which lenders can the broker access?
• Do they deal with lenders that consider applications involving adverse credit?
• Are they FCA-authorised?
• How are they paid?
• Do they charge an adviser fee?
• How do they assess which products may suit your circumstances?
• What support do they provide during the application?

Habito by Monzo provides fee-free mortgage advice, with advisers able to provide personalised support through the mortgage process. Habito does receive commission from lenders.

A broker cannot guarantee approval or change an applicant's credit history. The value is in helping the buyer understand criteria and compare options that may be relevant to their circumstances.

First-time buyer pre-application checklist

• Your income and whether any of it varies.
• Your student-loan plan and current deduction.
• Other regular financial commitments.
• What appears on your credit reports.
• Details of any missed payments or defaults.
• Your available deposit and its source.
• Your likely borrowing range.
• Your likely LTV.
• The mortgage repayment at several rates.
• The money you would have left each month.
• Which lenders a broker can access, whether they deal with adverse-credit lenders, and how they are paid.
• Whether you need personalised advice about lender criteria.

Frequently asked questions

Can I get a mortgage if I have student-loan debt?

Potentially. Having a student loan does not automatically prevent you getting a mortgage. Income-contingent repayments are based on earnings above the applicable threshold, and the resulting deduction can form part of your monthly financial commitments. Lenders apply their own affordability criteria.

Can I get a mortgage with missed payments or defaults?

Potentially, but previous credit problems can affect which lenders or products are available. Different lenders apply different criteria, and the details and timing of previous credit problems can matter. One lender declining an application does not establish what every other lender would decide.

Is it worth using a mortgage broker if I have bad or low credit?

A broker can help explain lender criteria and compare mortgage options relevant to more complex circumstances. Habito by Monzo - Monzo's mortgage experts - provides fee-free mortgage advice. Habito does receive commission from lenders. A broker cannot guarantee mortgage approval.

What should I look for in a mortgage broker if I have previous credit problems?

Consider the lenders they can access, their experience with circumstances similar to yours, whether they are FCA-authorised, whether advice is fee-free or charged, how clearly they explain eligibility and total mortgage costs, and the support available through the application.

Mortgage calculations and examples are for illustration and planning. Lender criteria vary, and neither a calculator nor a broker can guarantee mortgage approval.

Related UKCalc tools and guides

Every figure in this article is either a published source fact or a UKCalc calculation from stated inputs.