If you are suffering from a lot of credit card debt, you might wonder if there are any loans you can qualify for. Believe it or not, even with maxed-out credit cards, you may be able to obtain an FHA loan. You may even benefit from this decision in the long run. 

When to Get an FHA Loan with Credit Card Debt

Obtaining an FHA loan is beneficial when you have credit card debt, but you need to pay your bills on time. Showing that you pay your bills on time will demonstrate that you are a responsible borrower and will improve your credit score. It will also increase the odds that you'll be approved for an FHA loan. 

Considering Your Debt-to-Income Ratio

If you are carrying a considerable amount of credit card debt, an FHA lender might be less likely to qualify you for a loan. This is primarily based on your debt-to-income ratio. The debt-to-income ratio compares how much money you make in a month to how much debt you have. Even if you have a lot of credit card debt, if you have an income that can service that debt effectively, an FHA lender might still be willing to finance your home.

Typically, you'll want to have a debt-to-income ratio that is below 50 percent. In other words, if you are bringing in double the amount of debt that you hold, you may still be able to qualify for an FHA loan. However, the lower your credit card debt, the better your odds for qualifying for a loan.

Your Payment History Matters

If you have a fantastic payment history, this can lead to you having a high credit score. While a credit score isn't everything, the higher your score, the more likely it is that you will be able to overcome your high debt.

When you are applying for an FHA loan, the lender is required to record the amount of credit card debt that you hold at the time of the application. The good news is that even if you are denied an FHA loan for high credit card debt, there is a way around it. As you pay off your credit card debt, not only will you have a better debt-to-income ratio, but you'll also have a higher credit score and may be able to obtain a mortgage that has better terms and a lower interest rate, and you can have the flexibility to find a loan that meets your exact needs.