When you buy a house, a big part of a lender’s decision whether to approve your mortgage rests on whether or not you can afford it. If you have a lot of debt, the monthly payments on those obligations chip away at the total amount you can pay each month on a mortgage.
But that doesn’t mean it’s impossible to buy a house if you’re in debt. It’s just a bit more challenging. If you want to stop paying rent and enter the exciting world of homeownership, here’s how you can pay off debt to buy a house.
Getting mortgage loan financing requires you have a blend of sufficient, cash ample credit and income to offset a proposed new expense. You must have the right combination of all three in order to purchase or refinance a home. What might not make sense however is the lifeline that’s going to link all the pieces together is income. Here is how income is woven into your financial fabric of your mortgage application.
Timing is the other factor. If you bought the property in the last 12 months when the tax return is not due, then the same 75 percent rule applies.