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Getting Approved for a Mortgage with a High Debt-to-Income Ratio

Matthew Levy Updated: June 26, 2023 • 5 min read
mortgage approval

Debt-to-income ratio is the percentage of your monthly income that goes towards paying off debts. It's a critical factor that lenders consider when assessing your mortgage application. If you have a high debt-to-income (DTI) ratio but want to get approved for a mortgage, there are a variety of ways you can go about reducing your DTI. This includes budgeting, debt consolidation, and negotiating with creditors. You can also consider boosting your income by taking on side hustles and seeking higher-paying jobs.

As a first-time home buyer navigating the complex home-buying process, the debt-to-income ratio is critical to understand. Keep reading to learn more.

Understanding Debt-to-Income Ratio: What it is and How it Affects Mortgage Approval

Debt-to-income ratio (DTI) is one of the essential factors that lenders consider when evaluating your mortgage application. It measures your monthly debt payments compared to your monthly income and tells the lender how much of your income is being used to pay off debt each month.

When applying for a mortgage, you should plan to calculate your debt-to-income ratio using the below formula:

  1. Add up all your monthly debt payments (i.e. credit cards, car loans, student loans, and others).
  2. Divide that number by your monthly income before taxes.

For example, if you have $2,500 in monthly debt payments and a gross monthly income of $6,000, your DTI ratio would be 42% ($2,500/$6,000).

Generally, mortgage lenders look for a DTI ratio of 43% or lower.

If your DTI ratio is higher than that, some lenders are open to considering your situation - for example, if you have good credit or own multiple businesses, which can be sources of debt. As long as you work hard and budget, you can improve your DTI ratio to improve your chance of getting approved for a mortgage.

more income to pay debt

Strategies for Paying off Debt and Improving Your Debt-to-Income Ratio

Decreasing a high debt-to-income ratio starts with reducing some of your debt. Here are some tips to help you pay off debt and improve your DTI ratio:

  1. Debt consolidation: If you have multiple sources of high-interest debt, such as credit cards, you can consider consolidating your debt into a single loan with a lower interest rate. Lendstart has compared and reviewed reputable debt consolidation companies for you to consider.
  2. Increasing payments: If you can afford it, consider increasing your monthly payments on your debt. You’ll pay off debt faster and reduce the amount that goes to interest over time.
  3. Negotiating with creditors: This is an underrated tactic that many people don’t consider at first. If you simply contact your creditors, they might be willing to negotiate lower interest rates or reduced payments. Many creditors are willing to work with you if you're struggling to make your payments, as they may take a small loss on the interest rather than have you default on your debt.
  4. Budgeting: Create a budget to help you manage your expenses and prioritize your debt payments. There are many ways to do this, and it can help you identify areas where you can cut back on expenses. The 50/30/20 method is a popular way to budget by splitting income into needs, wants and savings.
  5. Balance transfers: If you have high-interest credit card debt, consider transferring your balance to a card with a lower interest rate. Though these cards generally carry a balance transfer fee, they can potentially save you hundred of dollars in interest payments depending on how much you owe.

If you’ve exhausted the above and still need to do more, finding mortgage lenders that accept high debt-to-income ratio applicants can also work to get a mortgage approved. Some lenders are more lenient, so research and shop for the best mortgage lender for your financial situation.

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Increasing Income to Lower Your Debt-to-Income Ratio and Qualify for a Mortgage

Another way to improve your debt-to-income ratio and qualify for a mortgage is to increase your income.  There are several ways to do this, including taking on a part-time job, freelance work, or starting a side business, and in today’s world, that’s probably easier than you think. Increasing your income can not only help you pay off debt faster, but it can also lower your debt-to-income ratio and make you more attractive to lenders.

There are many different types of jobs and gigs you can do on the weekends or in your spare time to earn extra money. Some options include pet-sitting, food delivery, or retail work. For more ideas, check out this list of 10 Best Weekend Jobs to Make Extra Money and Boost Your Income from Lendstart. You can also start a side business or monetize a hobby. This can include selling items on Etsy, starting a blog, or offering freelance services with something you specialize in.

With a higher income, you may be able to pay off debt more quickly and reduce your monthly debt payments, which can lower your debt-to-income ratio and make you more attractive to lenders offering high debt-to-income ratio mortgages or mortgage loans for high debt-to-income ratio borrowers.

reduce debt to improve DTI

Understanding Mortgage Qualification: How Lenders Evaluate your Debt-to-Income Ratio

Lenders typically look at two types of debt-to-income ratios when assessing a mortgage application:

  • Front-end debt-to-income ratio: Considers the total amount of your housing expenses, such as mortgage payments, property taxes, and insurance, as a percentage of your gross income. Lenders typically look for a front-end ratio of less than 28%.
  • Back-end debt-to-income ratio: Considers your total monthly debt payments, including housing expenses, credit card payments, car loans, and other debts, as a percentage of your gross income. Lenders typically look for a back-end ratio of less than 36%.

These aren't necessarily hard and fast rules, however. Some mortgage lenders may offer programs for people with high debt-to-income ratios. For more information, look at our up-to-date reviews of mortgage lenders that fit a variety of needs.


In conclusion, getting approved for a mortgage with a high debt-to-income ratio can be challenging, but it's not impossible. To increase your chances of approval, take steps to understand what debt-to-income ratio is and how it affects your mortgage approval. You can consider adopting strategies to pay off your debt and improving your debt-to-income ratio, such as debt consolidation, increasing monthly payments, and negotiating with creditors. Another viable option is to increase your income, either by taking on a part-time job or freelance work.

By taking these steps and working with reputable mortgage lenders with high debt-to-income ratio, you can significantly improve your chances of getting approved for a high debt-to-income ratio mortgage or mortgage loans for high debt-to-income ratio.

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Written by Matthew Levy

Matthew is a freelance financial copywriter with 14+ years in financial services. He holds a Bachelor of Science degree in Economics with business and finance options and is a CFA Charterholder. He is from Vancouver, Canada, but writes from all over the world.