Crossroads between paying down debt or saving for a higher down

[Timothy Chi]

Hoping to purchase my first property: dupex as a house hack. I have called some local lenders in WA state to get a feel of what I'd get on a mortgage. It seems that many lenders only care about my DTI ratio and not the actual amount of debt I have. Here's a little bit of background of myself: I have 7k in auto loans and 130k in student loans (federal and private). My minimum payments of all 3 are: 360 auto, 200 federal student loans, 470 private student loans. I have focused so much on the previous 4 years on debt pay down, without too much consideration on my minimum payments. I've always payed more than the minimum on my loans. As a result, I have some cash savings but that hasn't been my focus and thus I'll have a lower down payment. As I talk to lenders it seems they only care about my minimum payments and not my actual loan amount. It's causing me to wonder if maybe I should try to pay off my highest minimum payment loans first, like the auto and private student loans, rather than the ones that make financial sense (highest interest ones).

What's everyones thought on this? Do you feel that mortgage lenders typically care more about the DTI than actual debt amount? No credit card debt, just auto and student loans.

[John Warren]

@Timothy Chi you are pretty much correct that lenders have to make sure you fit in the box for conventional or FHA financing. They are trying to help guide you into how to get the loan, so lean on whichever lending partner you choose. Most importantly, make sure you are working with an excellent lender who has helped people house hack multiple times before. The devil is in the details on these loans, and 90% of lenders don't know how to get the 2-4 unit stuff done.