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Feb 23rd 2022

Managing your Debt-to-Income ratio is important. DTI will affect the accessibility of different loan types, or even the ability to obtain a loan. I want to touch on three main factors that you can manage yourself:

  1. 50% maximum credit usage on all accounts.
  2. Credit Score Ranges
  3. Income Reqs increase with higher DTIs

50% Credit Usage

Keep all credit lines below 50% at the maximum. Fixed loans such as auto or car loans are what they are, but keeping any revolving debt below 50% will help position you for lending options.

Credit Ranges – 20 Point Scale

Each credit score range roughly 20 points. For example, a loan rate might change after bumping up from the 660-680 range to the 680-700 range. This tyically hold true from 680-700, 700-720, and so forth. Say your credit score is 674, and six points will bump you up to 680, those six points could increase or decrease the loan rate on your new home purchase. Those six points could also affect the income requirements for your new loan. Set these zones as goals when working on your credit.

Higher DTI Income Requirements

Higher DTIs require higher income requirements. When the bank goes to qualify how much money you’re allowed to borrow, lower DTIs require less monthly income for the same amount of loan as higher DTIs. Managing your credit accounts to remain low enough will lessen the burden of needing more income each month.

Bonus DTI Help

Recently we had a customer looking to purchase a home, but his DTI kept his credit score too low and he couldn’t qualify. We asked many questions looking for a solution and discovered that he paid off a very large amount on a credit card the week before. As mortgage brokers, we have the ability to contact the Credit Bureaus and obtain an immediate update to an individual’s credit report and score. This pay off on just one card bumped his credit score up nearly 40 points. In this situation, all three factors worked together. We expedited his new credit report, which reflected the lower DTI increasing his credit score, which required less monthly income to qualify him for a new loan amount.

Manage Your DTI for Better Lending Options

Some situations take a little extra leg work, but whatever your situation, there’s a Juicy Solution waiting for you. I’d love to meet or talk with you to find out how I can help. Give me a call, shoot me a text or email, and take a look around the website for more helpful tips.