This Weeks Rates: Insured: 5-year fixed: Starting at 3.99% Variable: Starting at 3.54%Insurable: 5-year fixed: Starting at 4.09% Variable: Starting at 3.75%Conventional: 5-year fixed: Starting at 4.19% Variable: Starting at 3.95%CMB: 5-Year: 3.24%10-Year: 3.75%Understanding debt ratios is one of the most powerful yet overlooked tools real estate agents can use to close more deals and help clients secure properties at higher purchase prices. In this episode of the Close More Deals podcast, host Scott Dillingham breaks down the complexities of debt-to-income calculations and reveals how different lenders evaluate these critical numbers in dramatically different ways. Most agents know that banks typically use a 44% debt-to-income ratio as their benchmark. This means for a client earning $100,000 annually, approximately $44,000 can be allocated toward total debt payments including mortgage, credit cards, and lines of credit. However, what many agents don't realize is that this 44% figure carries completely different meanings at different financial institutions, creating opportunities for savvy agents who understand these nuances. Scott reveals how certain banks apply hidden handicaps to their debt ratio calculations. Some lenders take credit card limits and calculate payments as if the cards were maxed out, using 3% of the total limit as a minimum payment regardless of actual balances. This seemingly small difference can significantly impact a client's qualification, turning an approval into a denial without the client ever understanding why. The episode explores how various income sources receive dramatically different treatment across lenders. Child tax benefits, maternity leave income, rental income, and self-employed earnings are all evaluated using different methodologies depending on which lender processes the application. For agents working with first-time homebuyers carrying student debt, understanding how different lenders calculate student loan payments can mean the difference between closing a deal and losing a client. Scott introduces B lenders as a powerful alternative for clients who don't fit traditional banking criteria. These alternative lenders typically accept debt ratios ranging from 50% to 60%, but more importantly, they evaluate income and debts using more favorable methods. B lenders can incorporate guarantor income without attaching to the guarantor's credit bureau, use actual credit card payments instead of the 3% rule, and assess self-employed income through bank statements rather than tax returns. For situations where even B lenders cannot provide solutions, private lenders offer yet another pathway to deal closure. Private lenders focus less on strict debt-to-income numbers and more on the overall financial story and exit strategy. Whether clients need financing for properties in poor condition, are between jobs, or have other unique circumstances, private lending can bridge the gap that traditional financing cannot cross. The key message for real estate agents is clear: when a bank tells your client their debt ratios are too high, that's not the end of the conversation—it's just the beginning. By partnering with experienced mortgage brokers who understand the full spectrum of lending options, agents can rescue deals that would otherwise fall through and help clients achieve homeownership goals they thought were out of reach. Key Takeaways Debt Ratio Variations: The same 44% debt-to-income ratio means different things at different lenders due to varying calculation methods for credit cards, student loans, and income sourcesCredit Card Calculations: Some banks use 3% of your total credit limit as a payment, even if balances are zero, significantly impacting qualificationIncome Treatment Differs: Child tax benefits, maternity leave, rental income, and self-employed income are evaluated differently by each lenderB Lender Advantages: Alternative lenders accept 50-60% debt ratios, use actual payments instead of calculated minimums, and allow guarantor incomePrivate Lender Options: When traditional financing fails, private lenders focus on the overall story and exit strategy rather than strict ratiosNever Accept First No: If a bank declines based on debt ratios, consult a mortgage broker who can explore all available lending optionsLinks to Show ReferencesLendCity Mortgages: https://lendcity.ca (00:00) - Introduction to Close More Deals Podcast (00:34) - Why Understanding Debt Ratios Helps Close More Deals (01:14) - The 44% Debt-to-Income Ratio Explained (01:30) - How Banks Calculate Total Debt Payments (02:13) - Hidden Credit Card Calculation Methods (02:34) - Student Debt and First-Time Homebuyer Considerations (03:08) - Income Source Variations Across Lenders (03:14) - Self-Employed Income Treatment Differences (03:44) - Why Clients Shouldn't Apply Randomly to Lenders (04:10) - Introduction to B Lenders and Alternative Financing (04:30) - How B Lenders Use Rental and Guarantor Income (04:49) - B Lender Payment Calculation Advantages (05:18) - Self-Employed Approval Differences with B Lenders (05:40) - Private Lender Options for Unique Situations (06:07) - When Private Lending Makes Sense (06:26) - Closing Remarks and Call to Action Show Resources: We would love to partner with you for your referrals. 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