Welcome back. It is another day and another reason why people are denied a mortgage. It can be because of their debt to income ratio. Let me explain.

Debt to income ratio is the percentage of your monthly gross income that goes towards your monthly debt payments. Most lenders want to see that you are payming no more than 38% of your monthly income toward your debt. Lenders have been known to go up to 45%. The way they will do this is if you have excellent credit, money in your savings account, or big equity in your house.

We recommend that you know where you stand in this before you apply. If the debt is over the 38%, you might want to find a way to lower that percentage before applying. If you are an authorized user on any accounts that have high balances, get your name of that account before applying. This could make the difference on getting approved.

The last tip I have is to make sure that you do NOT make any large purchases before you apply for a home. A big mistake is that people buy a car before they apply for a mortgage and raise their debt. This is a no-no. Hold on to your car until AFTER you buy the home.

We will continue another reason on Monday. Be well and have a great weekend.