Leave a Message

Thank you for your message. I will be in touch with you shortly.

Should I Pay Off Debt Before Buying a Home?

One of the first things buyers tell me is, “I’m going to pay off some debt before I apply for a mortgage.”
That’s a responsible thought—but it’s not always the right move.

In Lubbock’s 2025 lending environment, paying off debt can either improve your approval odds—or delay your purchase unnecessarily. The key is understanding which debts matter most.

Here’s how lenders actually evaluate it:
They look at your Debt-to-Income (DTI) ratio—how much of your monthly income goes toward debt payments (credit cards, car loans, student loans, etc.). Generally, a DTI below 43% keeps you in a safe approval range, though some programs allow higher.

Paying off high-interest, revolving credit (like credit cards) often helps your score immediately because it lowers your utilization rate. But paying off installment loans (like car notes or student loans) doesn’t always help as much—it might even reduce your available credit mix, which can ding your score slightly.

And here’s the curveball: draining your savings to pay down debt can actually hurt your approval. Lenders want to see cash reserves—money left after closing—for emergencies and stability.

So the smarter approach is balance:

  • Pay down small revolving balances first.

  • Keep at least two months’ worth of expenses in the bank.

  • Don’t close credit cards once paid off—it can shorten your credit history.

  • Avoid new debt completely (no “0% furniture financing” before closing!).

Before making big financial moves, talk to your lender first. I pair my clients with trusted local professionals who run what-if scenarios—showing exactly how paying off or keeping certain debts affects your approval and rate. Sometimes, leaving a balance makes more sense than wiping it clean.

The goal isn’t zero debt—it’s strategic debt.

Homeownership is about showing consistency and control, not perfection. If your income is steady and your debt is manageable, you may be ready to buy now—without waiting months to chase an arbitrary number.

In short: don’t guess, don’t Google—get professional eyes on your numbers. Because in Lubbock, a well-timed decision beats a well-intentioned delay every time.

— Insights from Tess Hernandez, Realtor | Reside Real Estate

Recent Blog Posts

Home buying

Does My Down Payment Really Matter When Buying a Home?

Down payments matter—but not always in the way buyers think. Here’s when they matter most, when they matter less, and why timeline changes everything.

Home buying

Is a Pre-Inspection Worth It for Sellers?

Pre-inspections aren’t required—but in some situations, they can help sellers reduce surprises and strengthen their position.

Home buying

Should I Stop Worrying About Interest Rates If I Need to Move and Can Afford the Payment?

Interest rates matter—but they shouldn’t paralyze buyers whose life, finances, and timing already point toward moving. Here’s how to think about it clearly.

Home buying

Can a Buyer Back Out After a Home Inspection in Texas?

Inspections give buyers information—but understanding how decisions are made afterward helps reduce fear and confusion during the process.

Home buying

What Does a Home Inspection Actually Cover?

Home inspections aren’t about nitpicking—they’re about understanding the condition of the home you’re buying before surprises become your responsibility.

Home buying

Should I Skip the Home Inspection When Buying a House?

In competitive markets, buyers feel pressure to waive inspections—but skipping them can create long-term surprises that aren’t always obvious at first glance.

Home buying

How Long Does It Take to Buy a House in Lubbock?

From first showing to closing day, here’s what the home-buying timeline in Lubbock actually looks like—and what can speed it up or slow it down.

Home buying

Can You Buy a House After Bankruptcy in Texas?

Can You Buy a House After Bankruptcy in Texas?

Home buying

Can You Buy a House After a Divorce in Texas?

Can You Buy a House After a Divorce in Texas?

Work With Tess

Get assistance in determining current property value, crafting a competitive offer, writing and negotiating a contract, and much more. Contact me today.