When a lender processes your mortgage application, they will look at many factors, including your credit score, employment history, and debt-to-income ratio (DTI). Your DTI is a measure of how much of your monthly income is already going towards debt payments. Lenders generally want to see a DTI of 36% or below, but some may be willing to go higher if you have a strong credit score and other favorable factors.

If your DTI is too high, you may be denied a mortgage or you may be offered a loan with a higher interest rate. A higher interest rate will mean more money paid over the life of the loan, so it’s important to get your DTI under control before you apply for a mortgage.

There are a few things you can do to lower your DTI:

• Pay down debt. The more debt you have, the higher your DTI will be. Make a plan to pay down your debt as quickly as possible.
• Increase your income. If you can, get a raise or take on a part-time job to increase your income.
• Reduce your expenses. Take a close look at your budget and see where you can cut back on expenses.

Once you’ve lowered your DTI, you’ll be in a better position to qualify for a mortgage and get a lower interest rate.

Don’t Automatically Borrow the Maximum Amount

It’s important to remember that the amount of money a lender approves you for is not necessarily the amount you should borrow. Lenders will often approve borrowers for more money than they can comfortably afford. It’s important to do your own research and figure out how much you can afford to pay each month.

Focus on Your Financial Future

Getting a mortgage is a big decision. It’s important to focus on your financial future and make sure you can afford the payments. Don’t let yourself get into a situation where you’re house poor.

This article is for informational purposes only and is not intended to offer legal or financial advise.