How Much Debt is Too Much Debt?

Lots of individuals and families want to purchase a house, but have no idea where to start. Figuring out your Debt to Income Ratio is a great way to determine if you’re actually financially ready to buy a house.

Your Debt to Income Ratio (DTI) compares your monthly debt payments to your monthly gross (pre-tax) income.

The lower the DTI the better! A lower DTI lets lenders know that you have sufficient income to go towards expenses and debts each month. The ideal DTI ratio for a mortgage loan is around 36% or lower. 


If you’re not in this range, you’ll want to try these 3 ways to lower your DTI.

  1. Avoid taking on more debt before purchasing your home.
  2. Increase the amount you pay monthly towards debt. If you can, make extra payments on your debts.
  3. Postpone large purchases to avoid using more credit.


Once you start doing these things, recalculate your DTI ratio monthly to see if you’re making any progress on lowering your percentage. Keeping your DTI Ratio low will allow you to have more confidence and freedom when it comes to managing your finances and making other large purchases. If you have any questions about your DTI ratio and what type of mortgage you qualify for, reach out above to talk to our qualified loan officers.

Justice Roberts Loan Officer

Justice Roberts

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