If in the middle of the process I’ve been told my debt ratio is too high to qualify, can I then pay credit cards to better qualify?

In general, paying off credit card debt before a mortgage closing date is a smart move. It can lower your debt-to-income ratio and improve your chances of qualifying for a mortgage. However, many borrowers discover during the loan process that they need to reduce their debt-to-income ratio even further.

Mortgage brokers often recommend paying off credit card debt to help with this.

That said, you may have a follow-up question: Do you need to close the credit card account after paying it off? The answer depends on the type of mortgage you’re applying for. Here’s a breakdown:

• Fannie Mae (Conventional): You can keep your credit card account open after paying it off, but the underwriter may require it to be closed if needed for loan approval.
• Freddie Mac (Conventional): The same applies at Fannie Mae — the account can stay open after payoff, but it might need to be closed if the underwriter thinks it’s necessary.
• FHA, USDA and VA: The account must be closed after paying it off.

For more tips on how to improve your financial situation before buying a home, check out this blog post: How to Repair Poor Credit Before Securing a Home Loan.