I've been looking into getting a mortgage soon, and someone mentioned something about how banks look at your debt compared to your income. Honestly, I'm not super clear on how they calculate this or what's considered good or bad. Like, I have student loans, a car payment, and a couple credit cards (nothing crazy, but you know...life happens). My income is decent but not amazing, so I'm kinda worried about how this might affect my chances of getting approved.
Does anyone have experience with this? Maybe you've been through the mortgage process recently or work in finance or something. How strict are lenders usually about this ratio thing? And is there like a magic number I should aim for before applying? Any tips or personal experiences would be awesome.
"How strict are lenders usually about this ratio thing? And is there like a magic number I should aim for before applying?"
Lenders usually look at what's called your debt-to-income (DTI) ratio, which basically compares your monthly debt payments to your gross monthly income. Most banks prefer a DTI under 43%, but lower is always better. When I applied, mine was around 38% and it went pretty smoothly. If you're worried, maybe try paying down one of your smaller debts first—like a credit card—to improve your ratio a bit before applying. Good luck!
Yeah, lenders definitely care about DTI, but they're not robots about it. Mine was hovering around 41% (yikes, I know...), and they still approved me. But shaving off a bit of debt beforehand does make the whole process way less stressful.
"Mine was hovering around 41% (yikes, I know...), and they still approved me."
Yeah, lenders can be surprisingly flexible sometimes. I've seen folks get approved with even higher DTIs than yours, so you're definitely not alone. Still, like you mentioned, trimming down debt beforehand helps big time—just makes everything smoother. Good on you for tackling it proactively rather than waiting till the last minute... saves a lot of headaches down the road.
Yeah, lenders can be surprisingly flexible sometimes. I've seen folks get approved with even higher DTIs than yours, so you're definitely not alone.
The 41% mentioned earlier is definitely doable, but lenders usually prefer something under 36% for the smoothest approval. If you're hovering around or above 40%, it might help to tackle smaller debts first—like paying off a credit card or two—to quickly lower your ratio. I did this before applying, and it made the whole process less stressful. Also, double-check your credit report for errors; you'd be surprised how often mistakes pop up and mess with your numbers.
