If you’re trying to get a mortgage in Michigan, it’s essential to understand the type of debts you can own to qualify. Maintaining a high amount of debt that doesn’t meet the required debt-to-income ratio, or DTI, for the mortgage you’re trying to obtain will likely disqualify you. Paying off these debts may be required before you can get your mortgage.
What debts are included in the debt-to-income ratio when applying for a mortgage?
Fortunately, only specific debts are used to determine the debt-to-income ratio when applying for a mortgage. Knowing them can make it easier to determine if you qualify for a mortgage loan. Here’s a list of debts that are included:
– Auto loans
– Home equity loans
– Personal loans
– Credit cards
– Spousal alimony
– Child support payments
– Student loans
Cable, cellphone and utility bills are not included in your DTI ratio. However, it’s critical to ensure these accounts stay current. Otherwise, they could become delinquent on your credit report, lowering your credit score. Keeping your debt under tabs is also essential in ensuring that it doesn’t get out of control, forcing you to file for bankruptcy.
Qualifying for a mortgage requires a good debt-to-income ratio
Some financial lenders have specific ratios you must follow: 43% is a common DTI that you’ll need to maintain or stay below to qualify for a mortgage loan. However, it should be noted that these rules can change from lender to lender. For example, the DTI for a jumbo loan must be kept between 38 and 43%.
Knowing the DTI you must follow is essential when you want to obtain a mortgage. You don’t want to be stalled by the process, so learn about the requirements before you apply for a loan.