Normally, when you get a mortgage loan, the lender will calculate your total debt-to-income ratio – or in plain english, the amount of money you make each month divided by your total monthly bills. If your debt to income ratio is too high, you will not be able to qualify for a mortgage.
One thing that many people are starting to do who have too much credit card debt is something called debt settlement, but when you do debt settlement, your credit score suffers – so that is not a solution to “fixing” your debt to income ratio when needed.
So unless you can actually pay down your monthly debt, the only other way that you can “fix” your debt to income ratio is to increase your income.
But do you want the really good news? When you participate in the FHA streamline program, your debt to income ratio doesn’t matter. The reason it doesn’t matter is because the FHA streamline mortgage program doesn’t require that you disclose your income — so it would be impossible to calculate a debt to income ratio. There are very few refinance programs that don’t require a debt-to-income ratio (the VA Streamline refinance is another) so if you are lucky enough to be able to do a FHA streamline refinance because you have met the other criteria, don’t delay!
Guidelines can change at any time.