Learn About FHA Loans and How You Can Qualify
Should I change my spending habits before I apply for an FHA loan?
Last modified: August 30, 2023
There's one major mistake that homebuyers can easily make when applying for an FHA home loan. It's making a major credit purchase just before or during the loan application process.
Don't cloud your debt-to-income ratio with a big purchase before closing on your home. Remember that your debt calculations are based on your current expenses and debts. Your lender will compare that to whatever income you're generating.
Any major credit purchase will seriously alter the balance you experienced historically. Sometimes it can be enough to tip the scales against you when it comes down to an FHA loan approval. For example, if you can afford to pay off your current auto loan or other revolving debt before applying for an FHA loan, it may be a good decision.
Before you pay down any of your large debts, think about your overall financial picture and how much cash you'll need for a down payment and other related expenses. In general, getting rid of any debt on your record will help when you apply for the FHA loan. As always, if you have any doubts at all, consult a financial planner or ask your lender for advice.