If you’ve ever thought, “I’d love to buy a home, but I have too much debt,” you’re not alone.

Student loans. Credit cards. Car payments. Even medical bills. Most people carry some form of debt. And while that can feel like a barrier to homeownership, the reality is more flexible than you might think.

You don’t need a perfect financial situation to get approved for a mortgage. You just need to understand how your current debts fit into the bigger picture and how lenders look at your overall finances.

Let’s break it down.

It’s Not About Having Debt: It’s About Managing It

When you apply for a mortgage, lenders don’t expect a blank slate. What they’re really looking at is how well your current financial obligations fit into your income. And one of the biggest tools they use to measure that is your debt-to-income ratio, or DTI.

DTI compares your total monthly debt payments to your gross monthly income (your income before taxes). The lower your DTI, the easier it may be to qualify for a mortgage and explore more loan options.

What’s a typical DTI range? Around 45% or lower is common, but different loan types have different guidelines. Even if you’re above that, it’s still worth having a conversation with a loan officer. Exceptions are possible depending on your full financial picture.

What counts toward DTI? Things like:

• Student loans
• Credit card minimum payments
• Auto loans
• Personal loans
• Child support or alimony
• Any other recurring monthly debt that shows up on your credit report

Other factors may affect your DTI, so be sure to work with your loan officer to get the clearest picture.

Credit Scores Matter Too

While DTI helps measure how much debt you’re carrying, your credit score reflects how responsibly you manage it. Lenders look at your credit score to get a sense of your overall financial behavior, things like on-time payments, length of credit history, and how much of your available credit you’re using.

A strong score can help you qualify for more loan options and better interest rates, which could save you money over the life of your loan. Keeping credit card balances low and avoiding late payments is considered to be a best practice.

Here’s How Different Debts Show Up in the Process

Lenders don’t treat every type of debt the same. Here’s how a few of the most common kinds of debt may factor into your homebuying journey:

Student Loans

Often considered long-term installment debt, student loans are almost always factored into your DTI, even if they’re in deferment. In those cases, lenders may use a small percentage of the total loan balance to estimate a monthly payment.

Note: Guidelines can vary based on the loan program, so a lender can help break down what applies to your situation.

Credit Cards

Credit card balances are considered revolving debt. Lenders usually factor in your minimum monthly payments when calculating DTI. Keeping balances low, especially on cards close to their limit, can help improve both your DTI and your credit score.

Car Loans

Auto loans come with fixed monthly payments that are included in your DTI. If you’re thinking of buying a car and a home around the same time, it’s worth running the numbers.

Medical Debt

In most cases, medical bills are not factored into your DTI unless you’re making monthly payments. However, unpaid medical debt may still show up on your credit report, depending on how recent or resolved it is.

Note: How medical debt is treated can vary depending on the loan program, so it’s best to talk with a lender about how it might apply in your case.

Personal Loans & Pay-Over-Time Plans

Even short-term payment plans or “buy now, pay later” programs can add up. If they show up as monthly obligations, they’ll count toward your DTI so be mindful of how many are active at once.

Want to understand how debt types are categorized and how they show up in mortgage approval? Here’s a helpful breakdown.

Small Steps Can Make a Big Difference

If you’re feeling uncertain, you’re not alone. But the good news is: there are simple ways to get mortgage-ready, even with debt.

Here are a few tips:

• Check your DTI: Add up your monthly debt payments and divide by your gross income to get a rough idea of where you stand.
• Lower what you can: Paying down credit card balances (even a little) can positively impact both DTI and credit.
• Avoid opening new loans right before applying: That includes car loans, new credit cards, or retail financing programs.
• Apply for pre-approval: A Movement loan officer can walk you through your current numbers and help you understand what’s realistic without any pressure to commit.

Don’t Count Yourself Out

Debt doesn’t automatically disqualify you from homeownership. In fact, many buyers get approved every day while managing student loans, credit cards, and more.

The key is knowing where you stand and working with someone who can help you navigate your options. A Movement loan officer can walk you through your financial scenario and help you understand what’s possible.