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How to Buy a Home With High Debt-To-Income Ratio


For many, becoming a homeowner is the ultimate achievement. However, considering the high inflation rates and the

If your debt is higher than your income, then the chances of acquiring adequate financing become slimmer. Nevertheless, several options do exist, and you can still buy a home even if you have a large amount of debt.

Here are a few tips on how to buy a home with high debt-to-income ratio.

  1. Increase Your Down Payment

Increasing your down payment can make the difference between buying a home and acquiring adequate financing. Although this might not be viable if you have a huge amount of debt, CENTURY 21 Core Partners suggest that paying a down payment is a sign of seriousness. It shows that you have invested in the property, and lenders are likely to finance your mortgage.

When seeking a mortgage or a loan, the rule of thumb is simple. The lower the amount you borrow, the less the requirements for qualification. For this reason, it’s always a good idea to increase your down payment no matter the amount. That little increase can go a long way in helping you buy a house despite your debt woes.

  1. Reduce Your Debt-To-Income Ratio

Although it’s not possible to reduce your debt-to-income ratio instantly, you can do this over time. Take your time to establish the unnecessary expenses that are increasing your debt. Then, act accordingly to reduce your debts.

Settle any other debts you may have including student loans, credit card payments and vehicle loans to lower your debt-to-income ratio. That home that you’ve been yearning for may just be around the corner, as long as you manage to reduce your debts significantly.

  1. Seek Government Assistance

The federal government has numerous programs that seek to assist prospective homeowners with high debts. For instance, Federal Housing Administration loans facilitate potential homebuyers with high debt-to-income ratios. Those seeking to refinance can acquire Home Affordable Refinance Program (HARP) loans. Veterans also have a great alternative through the Veterans Administration loans program.

Nevertheless, before seeking government loans, always carry out a comprehensive research on the implications of such loans. Establish how much you need to repay, as interest rates may be well beyond your reach.

Different lenders have varying requirements for home financing and mortgages. Shopping around will not only save you time, but it will also help you find a loan that suits you. Lenders will want to verify your debts, assets, and paycheck, among other things.

As you seek to acquire financing for your home, remember to keep all your documents and financial records in order. For help with the next step, contact CENTURY 21 Core Partners today.


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Our agents write often to give you the latest insights on owning a home or property in the Central PA, Northern Maryland area.