Can I Buy a House with a High Debt-to-Income Ratio?
Buying a home is a major financial milestone—but if you’re carrying a lot of debt, you might be wondering: Can I buy a house with a high debt-to-income ratio (DTI)?
The short answer? Yes, it’s possible—but it’s more difficult. A high DTI can limit your mortgage options, increase your interest rates, or require additional documentation. But don’t lose hope—there are strategies and loan programs that can help you become a homeowner even with a heavy debt load.
In this blog post, we’ll cover:
- What your DTI ratio is and how it’s calculated
- Why lenders care about it
- How high is too high
- Ways to qualify for a mortgage with high DTI
- Actionable tips to improve your chances
What Is a Debt-to-Income Ratio?
Your debt-to-income ratio (DTI) is the percentage of your gross monthly income that goes toward paying monthly debts.
✅ DTI Formula:
DTI=(Total Monthly Debt PaymentsGross Monthly Income)×100\text{DTI} = \left( \frac{\text{Total Monthly Debt Payments}}{\text{Gross Monthly Income}} \right) \times 100
📌 Example:
If you earn $5,000/month and have $2,000 in monthly debts:
\frac{2000}{5000} = 0.4 \Rightarrow \text{DTI = 40%}
DTI includes:
- Credit card minimum payments
- Student loans
- Auto loans
- Personal loans
- Current mortgage or rent
- Alimony or child support (if applicable)
It does not include utilities, groceries, or other living expenses.
Why Do Lenders Care About DTI?
Your DTI tells lenders how much of your income is already committed to debt. If too much is going toward existing obligations, you may struggle to afford a new mortgage.
From a lender’s perspective, a high DTI = higher risk of default.
That’s why most mortgage programs have maximum DTI thresholds. Go above them, and you might be denied—or offered less favorable terms.
What’s Considered a High DTI?
Here’s how lenders generally categorize DTI:
| DTI Range | Meaning |
| Below 36% | Excellent – Strong chance of approval |
| 36% – 43% | Acceptable – Qualifies for most loans |
| 43% – 50% | Risky – May qualify for some programs |
| Above 50% | High – Difficult to get approved |
Note: These are general guidelines. Some loans allow up to 57% DTI under special circumstances.
Can You Buy a House with a High DTI?
✅ Yes, but it depends on several factors:
- Type of loan program
- Your credit score
- Your down payment
- Your job stability and income
- Cash reserves or assets
- Compensating factors (we’ll cover this below)
Let’s explore your options.
Mortgage Options for Buyers with High DTI
- Maximum DTI: Up to 57% (with strong compensating factors)
- Minimum credit score: 580 (with 3.5% down)
- Best for: First-time buyers and lower-income borrowers
FHA loans are the most forgiving when it comes to DTI. If your credit is solid and you have stable income, you may qualify with a DTI above 50%.
- Conventional Loans (Fannie Mae/Freddie Mac)
- Maximum DTI: Usually 45%, but can go to 50% with strong credit
- Minimum credit score: 620
- Best for: Buyers with better credit and higher down payments
With good credit and a down payment of at least 20%, you might get approved even with a high DTI.
- VA Loans (for Veterans and Active Military)
- No official DTI cap, but lenders often look for < 41%
- Zero down payment required
- Best for: Military service members and veterans
Some VA lenders have approved borrowers with DTIs above 50%, especially if they have residual income or strong credit.
- USDA Loans (for rural areas)
- Maximum DTI: Typically 41%, but flexible with strong credit
- Income limits apply
- Zero down payment
USDA loans are income- and location-based, but they’re another great low-down-payment option for buyers with moderate debt.
Compensating Factors That Can Help
If you have a high DTI, lenders may still approve you if you offer compensating factors, such as:
| Compensating Factor | Why It Helps |
| High credit score (700+) | Shows strong financial responsibility |
| Large down payment (10%+) | Reduces lender risk |
| Strong employment history | Stable income means you can manage payments |
| Cash reserves | Emergency funds reduce risk of default |
| Low housing expense relative to income | Even if total DTI is high, mortgage alone is manageable |
| Debt with few months left | Temporary debts (like a car loan with 6 months left) may be excluded |
6 Ways to Buy a House with a High DTI
If your DTI is higher than lenders typically accept, here are steps you can take to improve your chances:
- Pay Down Debts Before Applying
Reducing your monthly obligations—even slightly—can make a big difference.
Example:
- Paying off a $100/month car loan could increase your purchasing power by $15,000–$20,000.
Start with:
- High-interest credit cards
- Small installment loans
- Any debt with fewer than 10 payments remaining
- Increase Your Income
If your income increases but your debt stays the same, your DTI improves.
Options include:
- Asking for a raise
- Taking on a part-time job
- Freelancing or side hustles
- Adding a co-borrower (if allowed)
Tip: Most lenders require proof of income for 2 years, so be sure extra income is documented.
- Consider a Co-Signer or Co-Borrower
Adding someone with low debt and strong income to your application can help offset your high DTI.
But be aware:
- They’re legally responsible for the loan
- Their credit will be affected too
Make sure this is a mutual, trusted partnership—ideally with a spouse or family member.
- Shop Around for Lenders
Different lenders have different risk tolerances. Some specialize in helping buyers with non-traditional financial profiles.
You might be rejected by one lender—but approved by another.
Look for:
- Credit unions
- Mortgage brokers
- Online lenders with flexible criteria
- Make a Larger Down Payment
Putting down more money reduces the amount you borrow, which lowers your monthly mortgage payment—and therefore, your DTI.
Even an extra 2%–5% down can move the needle on approval.
- Choose a Cheaper Home
If your DTI is too high for your current price range, adjust your expectations. Consider:
- Smaller homes
- Homes in more affordable neighborhoods
- Condos or townhomes
Lowering your target price by even $20,000 can bring your mortgage payments into the acceptable DTI range.
Can You Get Pre-Approved with a High DTI?
Yes—but your pre-approval will likely be:
- For a lower loan amount
- Contingent on additional documentation
- Possibly tied to higher interest rates
Get pre-approved before house hunting so you understand your budget—and work with a lender who communicates clearly about DTI requirements.
Final Thoughts
Buying a house with a high debt-to-income ratio isn’t easy—but it’s not impossible. With the right mortgage program, smart financial moves, and a lender who understands your situation, you can still achieve homeownership.
Here’s your action plan:
- Calculate your current DTI
- Explore FHA, VA, or other flexible loan options
- Pay down debt or boost your income
- Look for compensating factors
- Get pre-approved to know where you stand
Even if you’re not quite ready today, take steps now to lower your DTI—and you could be handing over keys to your new home sooner than you think.
Want help planning your path to homeownership? Talk to a trusted mortgage advisor or financial planner to review your debt, income, and homebuying goals.