Should you pay off credit cards before applying for a mortgage?

Yes — in many cases it makes sense to pay down credit card balances before applying for a mortgage, as long as doing so doesn’t leave you short on cash for your down payment, closing costs, and an emergency reserve.

Why it can help:

1. Lower DTI: Credit card minimum payments count in your debt-to-income ratio, so reducing balances can improve your mortgage qualification.
2. Better credit utilization: Paying down revolving balances can improve your credit score, especially if your card balances are high relative to their limits.
3. Stronger overall profile: A lower DTI and stronger credit can sometimes help you qualify for a better rate or a larger loan amount.

A few practical rules:

• Don’t empty your savings just to pay off cards. Mortgage lenders often want to see enough cash left over for the purchase, closing costs, and sometimes several months of post-closing cash reserves in savings, depending on the loan type and your profile.
• Try to lower balances well before applying so the reduced balances have time to show up on your credit report.
• Avoid opening new credit or taking on new debt while you’re in the mortgage process.
• Usually keep the accounts open after paying them down, since closing an account can reduce available credit and may hurt your utilization.

If your cash is limited, paying cards down substantially can still be a good middle ground — but the best move depends on your mortgage type, your credit profile, and how much cash you need to keep on hand. A loan officer can tell you the best balance between debt paydown and cash reserves for your situation.