MARLTON, N.J.–High levels of student debt has been cited by numerous analysts for keeping many Millennials out of the housing market.
Now one company is proposing to introduce a loan that would roll student debit into a 30-year, fixed-rate mortgage—but only for an exclusive, small market of potential borrowers. And some analysts are suggesting the proposal simply isn’t feasible.
Burkey Capital here said it plans to introduce later this year the BurkeyLoan, which will target borrowers who have very strong credit, i.e., those in the top 20% or so of earning households and which can show several years of work experience at positions in which they earned at least $150,000 annually. This would include people who work in medical fields, for instance, where there are not just higher salaries but better levels of job security.
According to the company, which has not provided many details of its plans, the program will be offered only for jumbo loans, which start at $417,000, with the product eventually being available to purchasers of properties in the mid-$200,000 range. There will be a 10% down payment requirement on the amount borrowed, which would also include the outstanding student loan balance.
The company indicated the proposed loan program would also allow some payment deferments in the event of certain life events.
Burkey Capital is a family-owned, private investment company whose president indicated current plans call for funding the loans through institutional investors. Due to the risk involved, the loans are expected to be priced slightly above market.
Some analysts have suggested the loan simply isn’t feasible, because borrowers would be unable to sell the homes due to the level of student debt included in the mortgage.