AUSTIN (KXAN) — New data shows how looming college debt can impact first-time homebuyers in Texas.

Texas Real Estate Research Center data shows student loan debt can consume between 3.3% to 10.9% of income for the average Texas college graduate.

A household that earns $50,000 needs over two years, on average, to save for a down payment on a $217,000 home, according to the research center. However, this time increases to six years if the household has student loans, the release said.

Ryan Rodenbeck, a broker at Spyglass Realty, said the main issue is the rise of the down payment. He said when the market was extremely competitive in 2020 and 2021, down payments had a big impact on which offers, specifically cash offers, were accepted.

National data from 2021 said 29% of these buyers cited saving for a down payment as the most difficult step of the home buying process.

“With the rise of prices and the rise of interest rates…if you’re gonna put 5% or 10% or 15% or 20% down on the average home in Austin—which is almost $700,000—that becomes a considerable hurdle for first-time buyers,” Rodenbeck said.

He said millennials, who are a large portion of first-time buyers, have not seen interest rates above 5%, but historically this is an average rate. He said the phrase “date the rate, marry the house” has become common in the industry.

“When you buy a home, you’re going to be in the home for several years. You can refinance your home next year if rates go down, and any cost of that refinancing is going to be covered—most likely—by the appreciation. We’re expecting to see around 10% appreciation over the next 12 months.”

Other issues facing first-time buyers are high home-price appreciation, demand for homeownership despite limited home supply, tightened mortgage credit availability and rising mortgage interest rates, said Clare Losey, a housing affordability expert, in the release.

The research center added that having loan debt makes increases someone’s credit risk, which can impact a person’s ability to save and lowers a credit score if loan payments are missed.

Advice for first-timers

Texas Realtors data shows that first-time home buyers made up 32% of all homebuyers, per the 2022 report.

Rodenbeck said first-time buyers should “get your ducks in a row right now” even if they are planning to buy down the road.

“My advice to first-time buyers is to make a plan, figure out how much you’re going to need to put down, coordinate with a real estate agent to see what you can afford with your downpayment and shop the areas that are conducive to your lifestyle,” he said.

But Rodenbeck said now is a better time to buy because it’s less competitive than one or two years ago.

“If you were in the market in the last two years, and you’ve got out of it because things were so crazy, I would take a look at what’s happening right now,” he said.

The city of Austin has a down payment assistance program where income-eligible, first-time home buyers can qualify for up to $40,000 in assistance. This can apply to down payments and closing costs. But the program is limited to homes that sell at $380,000 or less.