On Oct. 1, millions of Americans will face the harsh reality of having to resume student loan payments after a three-year respite instituted during the COVID-19 pandemic.

Of the roughly 43 million adult Americans with a federal student loan, the debt burden falls excessively on young adults, according to the New America think tank. Specifically, one-third of those who carry student loan debt are 25 to 34 years old, although Americans of all ages grapple with the debt.

The resumption of monthly debt repayments looming on the horizon for these younger adults coincides with that point in their lives when they’re most likely to be shopping for homes. However, paying off that debt plus mortgage rates stuck above 7% and home prices that continue to rise are likely to result in delays for many hoping to achieve the American dream of homeownership.

And it’s not just about owning a home.

“The age of first-time homeownership really does matter for long-term wealth building,” says Jung Hyun Choi, a senior research associate with the Housing Finance Policy Center at the Urban Institute. “We do find evidence that those who purchase homes younger in life have significantly greater housing wealth.”

Where do student loan repayments stand?

Millions of former students and graduates are expected to have had to rearrange their budgets to resume payments averaging $337 a month, according to The Motley Fool. Interest on the loans resumed on Sept. 1.

Those monthly payments are on top of pricier rents, inflation, the huge increase in mortgage rates over the past year, and higher home prices. That’s left many potential buyers facing the prospect of even higher monthly mortgage payments they can’t afford after some student loan relief efforts they were hoping for were stalled.

The U.S. Supreme Court blocked the one-time student loan forgiveness program from President Joe Biden‘s administration, which would have provided up to $20,000 in relief to millions of student loan borrowers. Before that decision, the administration had approved more than $116.6 billion in student loan forgiveness for more than 3.4 million borrowers.

In response to the Supreme Court’s ruling, the Biden administration launched the Saving on a Valuable Education (SAVE) Plan, which is an income-driven repayment plan that calculates student loan repayments based on a borrower’s income and family size—not their loan balance—and forgives the remaining balance after a certain number of years.

According to the administration, the SAVE plan “will cut many borrowers’ monthly payments to zero, will save other borrowers around $1,000 per year, will prevent balances from growing because of unpaid interest, and will get more borrowers closer to forgiveness faster.”

Some borrowers might still be eligible for student loan forgiveness via an existing student loan forgiveness program, including the Public Service Loan Forgiveness program.

However, these programs won’t apply to every borrower and many will have to begin making student loan payments this fall.

Student loan repayments and first-time homebuyers

For millions of Americans, student loans serve as a barrier to achieving financial goals, including the ability to save up for a down payment and closing costs to purchase a home.

A recent survey by the National Association of Realtors® found that nearly one-quarter of all home buyers and 37% of first-time homebuyers had student debt, with an average amount of around $30,000. A little over a quarter of student-loan debt holders, 29%, said their debt has affected their decision or their ability to purchase a home.

The typical mortgage payment is about 90% more than it was just two years earlier, according to an analysis looking at the Realtor.com® median home list prices and Freddie Mac’s average weekly mortgage rates. (This doesn’t include property taxes or home insurance costs.)

Unfortunately, higher interest rates are also affecting borrower’s debt-to-income ratio. The more debt someone has, the harder it is to qualify for a larger loan.

“The debt-to-income has become the dominant reason behind mortgage denials,” says Choi.

Of course, for some first-time homebuyers, the resumption of student loans might make little difference in an already pricey housing market.

“The resumption of student loan payments is certainly not a plus for potential first-time homebuyers, but I don’t think it will make a significant difference since they’re already locked out of the housing market by the high mortgage rates and high house prices,” says Mark Zandi, chief economist at Moody’s Analytics. “Purchasing a home for most potential first-timers is not affordable—with or without the resumption of student loan payments.”

What options do borrowers have in this market?

All might not be lost for those who are facing student loan debt repayment and don’t want to defer their dream of homeownership, says Ralph DiBugnara, mortgage banker, real estate investor, and president of Home Qualified in New York City.

Buyers might be eligible to receive assistance on down payment and closing costs or find mortgages that require no down payments, such as Veterans Affairs loans, U.S. Department of Agriculture loans, or government-backed, low down payment loans such as Federal Housing Administration loans where buyers often need just 3.5% down.

“What’s come out of the market being less affordable is there are a lot of state, local, and government programs that are allowing down payment assistance … especially if you are in any average or lower-than-average income bracket,” he says.

In addition to down payment assistance, first-time homebuyers should take a hard look at their real budget, especially with student loan repayments coming back, and perhaps even consider house hacking, says DiBugnara. This can mean buying a home with family or friends or purchasing one with a room, additional unit, parking spot, or even a pool that could be rented out for extra money.

“Find a home or any kind of property where you can generate income on it while you’re living there,” DiBugnara says.

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