Want to buy a home but have small debts? I have the solution.

by Maria Del "Carmen" Sanchez

Las deudas pueden convertirse en una trampa de la que es complicado salir. Foto: Getty Images.

When you embark on the exciting adventure of buying a home, one of the most critical aspects is your credit score and how your debt is calculated in relation to your income. This ratio, known as “debt-to-income” or DTI, is one of the key factors lenders evaluate to determine your ability to repay a mortgage loan.

However, there is one piece of good news that many potential buyers are unaware of: collection accounts totaling less than $2,000 do not need to be counted in a borrower's debt-to-income ratio. This can be a significant relief for those who are concerned about how these accounts may affect their ability to qualify for a loan.

What Does This Mean for You?

Less Financial Pressure: If you have small debts on your record, such as collection accounts for less than $2,000, you can rest easy knowing that they will not be included in your DTI calculation.

Exclusion of Medical Bills: This is particularly beneficial since many people may have outstanding medical bills due to the unpredictable nature of health care expenses.

The Qualification Process: Although these debts can be omitted from the qualification process, it is crucial that you speak with your lender or financial advisor about your specific situation.

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