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October 2017

Homebuilder's subsidiary offers student loan repayment for young homebuyers

More than eight of every ten millennials who don't own a home (83 percent) told researchers their student loan debt affected their ability to buy. That knowledge help prompt the lending arm of a Fortune 500 homebuilder to craft a mortgage program that will help buyers of their homes pay off their student debt.

Eagle Home Mortgage, a subsidiary of Lennar Corp., will pay off as much as $13,000 in student loans for qualified borrowers purchasing a new home from Lennar. Under its Student Loan Debt Mortgage Program, the lender will direct 3 percent of the home purchase price to repay the borrower's students loans.  The 3 percent contribution would not increase the price of the home or the amount of the mortgage.

The program's maximum loan amount is $424,100, but Lennar said in addition to the 3 percent contribution to student loan balances, buyers may also be eligible for other incentives such as credits toward closing costs. The company said the program is not intended for parents who took out loans to finance a child's education.

The program (with certain conditions) is being rolled out on a trial basis with new Lennar homes nationwide. Its homes are found in 40 markets within 19 states, including several locations in Western Washington.

"Education is an investment in yourself and your community - and Lennar wants to help ensure that college loans don't unnecessarily stand in the way of homeownership," stated Jon Jaffe, chief operating officer of Miami-based Lennar.

In a recent study by the National Association of Realtors® (NAR) and American Student Assistance, a nonprofit that strives to help students who want an education get one in a financially responsible way, millennial respondents described their impediments to buying a home.

Among respondents in the millennial group, only 20 percent own a home. The majority of those polled carry an average student debt of $41,200 - more than their average income of $38,800. (The average outstanding student loan balance is $26,700, according to the New York Federal Reserve.)

Millennials expect to postpone buying a home for a median time of seven years, with 84 percent saying they'll defer for at least three years.

"Americans are more burdened than ever by student loans, with $1.3 trillion in outstanding student loans spread out among 42 million borrowers," Jimmy Timmons, president of Eagle Home Mortgage, said in a release. "Our program is designed to relieve some of that burden and remove that barrier to owning a home."

Earlier this year, Fannie Mae unveiled a significant expansion of its student loan cash-out refinance program, an option that expands on a program it introduced about a year ago with SoFi. Fannie Mae has also introduced new policies to help borrowers with student loan debt get qualified for mortgage loans.