Is paying off a personal loan before applying worth the lost cash reserve?

I’m trying to compare two mortgage-readiness options and would appreciate a lender-focused sanity check.

The personal loan has a remaining balance of **$18,000** and a required monthly payment of **$475**. I currently have **$72,000 in savings**. If I pay it off before applying, I’d have about **$54,000** left. If I keep the loan, the full $72,000 would remain available, but the $475 payment would count in my monthly debt obligations.

I’m targeting a mortgage application in roughly six months, with an expected 20% down payment. I’m also estimating closing costs separately and want to preserve funds for immediate repairs, moving expenses, and an emergency reserve. The property may need work after purchase, so using nearly all available cash for the down payment and closing would make me uncomfortable.

The main question is how lenders would compare these two situations:

- With the loan paid off, does removing the $475 monthly payment usually improve qualifying income enough to materially increase borrowing capacity?
- With the loan retained, does the larger savings balance meaningfully help the application, or is the debt-to-income impact usually more important?
- Is there a reasonable cash-reserve threshold where paying off the loan starts to make more sense than keeping the money available?

I know the answer will depend on income, credit, loan type, and the eventual purchase price, but I’m trying to understand which factor lenders generally weigh more heavily before I decide.