Lenders don't just look at your income — they look at how much of it is already spoken for. Your existing monthly commitments directly reduce how much mortgage you can carry.
The ratios lenders use
Two debt-service ratios matter: how much of your income goes to housing, and how much goes to all debt including the new mortgage. Every $100/month of car or loan payment can knock a meaningful chunk off your approved amount.
What counts against you
- Vehicle loans and leases
- Student loan payments
- Credit card and line-of-credit balances (a percentage of the limit is often counted, even if you pay in full)
- Support payments and other fixed obligations
Smart moves before you apply
- Avoid taking on new debt or credit in the 3–6 months before applying.
- Pay down the highest-payment debts first — reducing the monthly payment helps your ratios more than reducing a balance with a tiny payment.
- Don't close old cards right before applying; it can affect your utilization and history.
Your move
List your fixed monthly commitments and, where you can, clear the ones with the biggest monthly payments before pre-approval.