Can You Get a Mortgage If You’re in Debt? What You Need to Know in 2025

Can you get a mortgage with debt? You’re not alone in asking. With rising living costs and more people juggling credit cards, loans, or past financial mistakes, many wonder if homeownership is still possible. The short answer? Yes, but it depends on a few key factors like your income, debt level, credit history, and who you apply with.

In this article, we’ll break down everything you need to know in 2025 if you’re trying to buy a home while in debt. We’ll cover how your debt-to-income ratio affects approval, what to expect with bad credit, and your options if you’re in an IVA or on a DMP. You’ll also learn practical tips to boost your chances, even if your finances aren’t perfect.

Can You Get a Mortgage with Debt in 2025?

Yes, but it’s not always easy. One of the most common questions people ask is, can you get a mortgage with debt? In 2025, with the cost of living still high and borrowing more common than ever, many potential buyers find themselves dealing with some level of debt. 

The good news is that having debt doesn’t automatically block you from getting a mortgage. The key lies in how much debt you have, how you manage it, and what lenders see when they assess your application.

How Lenders View Different Types of Debt

Lenders don’t treat all debt the same. They assess each type of debt differently depending on the risk it poses to your ability to repay a mortgage. Some debts are manageable and expected, while others raise concern, especially if payments are missed or nearing limits.

Here’s how different debts are typically assessed by lenders:

• Credit cards and personal loans: These are common, but carrying high balances or missing payments can hurt your chances.
• Car finance: Acceptable if payments are regular, but large amounts may reduce your borrowing capacity.
• Student loans: Usually taken into account when calculating affordability, though treated less harshly than unsecured debt.
• Buy Now Pay Later (BNPL): Becoming more relevant as lenders begin to factor these into affordability checks.
• Debt management plans (DMPs) or Individual Voluntary Arrangements (IVAs): These carry higher risk in lenders’ eyes but aren’t automatic disqualifiers.

Some specialist lenders offer mortgage approval with bad credit, especially if you can show a solid repayment history and reliable income.

Key Factors That Lenders Consider

Lenders weigh up a combination of factors when reviewing a mortgage application from someone in debt. The overall picture matters more than just a credit score or debt figure.

• Income: The more stable and provable your income, the more comfortable lenders feel.
• Credit score: A low score can reduce your options, but it doesn’t make it impossible to get approved.
• Debt amount: A few hundred pounds in credit card debt is seen differently than tens of thousands in unsecured loans.
• Deposit size: A larger deposit can offset concerns about debt or bad credit and improve your overall profile.

If you can demonstrate responsible debt management and meet affordability criteria, you may still qualify for a mortgage. However, one of the biggest numbers lenders will look at is your debt-to-income ratio. Let’s explore how that works next.

How Your Debt-to-Income Ratio Affects Approval

Your debt-to-income ratio (DTI) is a critical part of any mortgage application. It gives lenders a quick view of how much of your income is already committed to debt repayments. The higher the ratio, the less room there is in your budget to take on a mortgage.

What is DTI and How Is It Calculated in the UK?

In the UK, your DTI is calculated by dividing your total monthly debt payments by your gross monthly income (before tax), and then multiplying by 100 to get a percentage. This helps lenders assess how much pressure your current financial commitments place on your income.

Debt payments often included in DTI calculations:

• Credit card minimum repayments
• Personal loans
• Car finance payments
• Student loan repayments
• Any other regular contractual debt payments
• Child maintenance or other legally required payments

For example, if you earn £3,000 per month and your total debt payments are £750, your DTI would be 25%.

Ideal DTI for Mortgage Approval

While lenders differ slightly, most prefer your DTI to be under 35%. This shows you have enough financial flexibility to manage mortgage payments and unexpected costs.

Here’s a general breakdown:

• Below 30% – This is considered ideal and will meet most lenders’ criteria.
• 30% to 45% – Approval is still possible, but you may need a larger deposit or a lender with more flexible criteria.
• Above 45% – Approval becomes more difficult unless your income is high or you’re working with a specialist lender.

Some lenders may go as high as 50%, particularly if you have a stable job and a clean recent credit history. However, this is less common and often comes with stricter conditions.

What Happens If Your DTI Is Too High?

If your DTI is too high, lenders may take several steps. They might lower the amount they’re willing to lend or suggest you pay off some of your debt before reapplying. In some cases, your application may be declined outright. You might also be advised to wait and improve your financial position before trying again.

Other times, they’ll refer you to a specialist lender or mortgage broker who deals with cases involving higher debt. These brokers often work with clients who are on a DMP or have recently come out of an IVA.

So what does that mean if you’re currently in one of these debt plans, or recently completed one? We’ll look at your options for getting a mortgage after an IVA or while on a DMP in the next section.

Getting a Mortgage with Bad Credit

Bad credit is a general term, but to lenders, it refers to a history that shows a pattern of missed payments, defaults, or financial difficulty. Your credit file reveals this, and it’s one of the first things lenders will check when you apply.

Bad credit can include:

• Missed or late payments on credit cards, loans, or utility bills
• County Court Judgements (CCJs)
• Defaults on credit agreements
• Debt management plans (DMPs)
• Individual Voluntary Arrangements (IVAs)
• Bankruptcy (if applicable within the past 6 years)

Even if your score isn’t terrible, signs of poor repayment behaviour can trigger concerns.

How to Get Mortgage Approval with Bad Credit

Getting a mortgage approval with bad credit is definitely possible, but it takes more preparation and realistic expectations. Lenders want to see that your financial situation has improved since the credit issues occurred.

Steps that can help:

• Wait at least 12 months after major credit problems (like an IVA or DMP starting)
• Maintain a perfect payment record on all credit accounts going forward
• Reduce your unsecured debt as much as possible
• Avoid applying for new credit before applying for a mortgage
• Check your credit report and fix any errors

Time is one of the biggest factors. The longer it’s been since your credit issues, the better your chances, especially if you’ve built up a solid deposit and have stable income.

Role of Specialist Lenders and Larger Deposits

High-street lenders often have strict criteria. If your credit record is less than ideal, you may need to approach a specialist mortgage lender who works with applicants who have poor credit.

These lenders will still check your affordability, but they are more likely to consider your application if:

• The issue happened over a year ago
• Your debts are under control
• You have at least a 15–20% deposit

A larger deposit reduces the risk for lenders. It can also result in more favourable rates, even when your credit file isn’t perfect.

Still dealing with active debt arrangements like an IVA or DMP? The process is a bit different. Let’s move on to how those affect your chances of getting a mortgage.

Mortgages After an IVA or While on a DMP

An IVA (Individual Voluntary Arrangement) is a debt solution that stays on your credit file for six years from the start date. During the IVA, most mainstream lenders won’t offer a mortgage. However, your chances improve once the IVA is completed and enough time has passed.

In general:

• During an IVA: Most lenders won’t approve a mortgage
• 0–2 years after an IVA: Few lenders may consider you, but expect strict conditions and high interest
• 2–6 years after an IVA: More specialist lenders open up, especially with a good payment history
• 6+ years after: If your credit has been clean since, some high-street lenders may approve your application

Having a larger deposit (20% or more) and using a broker experienced with IVA cases can make a big difference.

Can I Get a Mortgage on a DMP?

The answer is yes, but it depends on your specific situation. If your DMP is still active, you’ll likely need to go through a specialist lender. They’ll assess whether:

• You’ve been keeping up with payments
• Your income is steady and provable
• Your other debts are under control
• You’ve not taken on new credit recently

Some lenders will accept applicants in a DMP if the plan has been running smoothly for at least 12 months. However, the terms may be stricter, and your borrowing options more limited.

If your DMP is complete, and more than a year has passed, your chances increase, especially if your credit record shows no new issues.

What Lenders Will Check and How to Improve Your Chances

Lenders dealing with applicants in or after a DMP or IVA will look closely at:

• Your payment history since entering the plan
• The current balance of your debts
• Your overall debt-to-income ratio
• Your savings and deposit size
• Any recent credit behaviour (especially applications)

To improve your chances:

• Keep up regular payments on all debts
• Avoid any new borrowing
• Save for as large a deposit as possible
• Consider working with a broker who has access to non-standard lenders
• Review your credit report before applying

You don’t need a perfect history, but you do need to show that things are on the right track. 

Tips to Improve Your Mortgage Chances While in Debt

Getting a mortgage while in debt may feel like a long shot, but the right steps can shift the odds in your favour. If you’re asking can you get a mortgage with debt, the answer depends heavily on how well you prepare your application. Lenders are looking for signs that you can manage existing obligations while taking on new ones.

Below are key ways to boost your chances:

Reduce Unsecured Debt First

Unsecured debts, like credit cards, overdrafts, and personal loans, are seen as higher risk by mortgage lenders. Reducing or paying off these debts before you apply shows lenders that you’re financially responsible and improves your debt-to-income ratio.

Start by paying down:

• High-interest credit card balances
• Personal loans with short terms
• Buy Now Pay Later accounts that appear on your credit file

Even if you can’t clear everything, lowering your monthly repayments helps your affordability score.

Check and Fix Credit File Issues

Your credit file is one of the first things a lender will check. A poor credit history can lead to rejection, but sometimes, it’s outdated or incorrect information that’s the real issue.

Before applying:

• Request your credit report from all three UK agencies: Experian, Equifax, and TransUnion
• Look for old addresses, incorrect missed payments, or outdated defaults
• Dispute any errors directly with the agency

Fixing small issues can significantly improve your chances, especially if you’re already applying with bad credit or recovering from an IVA or DMP.

Save a Bigger Deposit

A larger deposit lowers the lender’s risk and shows financial discipline. It also helps you access better interest rates, even if you’ve had credit issues.

Aim to save:

• At least 10% of the property’s value (ideally 15–20% if you have bad credit)
• More, if you’re still in a DMP or have an IVA on your file

The higher your deposit, the more flexibility you’ll have with lenders.

Avoid New Credit Applications

Lenders don’t just look at your existing credit, they also consider your recent credit activity. Applying for new credit close to a mortgage application date can raise red flags and reduce your score.

For at least 3–6 months before applying:

• Avoid taking out new loans or credit cards
• Don’t apply for “buy now, pay later” schemes
• Hold off on car finance if possible

Too many recent credit searches can signal financial stress, even if you don’t accept the offers.

Use a Broker Who Works with Bad Credit Cases

A mortgage broker who specialises in bad credit or high-debt cases can make a huge difference. They have access to lenders who won’t appear on comparison websites, and they know how to package your application to highlight strengths and explain past issues.

A broker can:

• Match you with lenders who accept applicants in a DMP or post-IVA
• Help you prepare the right documents
• Negotiate better terms based on your current circumstances

If you’ve been turned down before or have unusual financial history, this step alone can open doors.

Conclusion

So, can you get a mortgage with debt in 2025? Yes, but it’s not guaranteed, and it depends on how you manage your finances before applying. Lenders don’t expect you to be completely debt-free, but they do want to see that you’re in control. 

Whether you’re dealing with bad credit, recovering from an IVA, or currently on a DMP, there are still options available, especially if you take the right steps.

The key is preparation. Keep your debt-to-income ratio low, check your credit file, save a solid deposit, and avoid last-minute borrowing. 

And if things still feel overwhelming, working with a specialist broker can give you access to lenders who understand your situation. With the right approach, your dream of homeownership doesn’t have to be put on hold, even if you’ve had debt in the past.

Key Points

• You can get a mortgage with debt in 2025, but lenders will assess your overall financial profile, not just your debt.
• Different types of debt are treated differently, credit cards, personal loans, IVAs, and DMPs all affect applications in unique ways.
• Debt-to-Income Ratio (DTI) is crucial. Most UK lenders prefer a DTI below 35%, though some may allow up to 45–50% with strong financials.
• Bad credit doesn’t mean automatic rejection, but you may need to apply through a specialist lender and offer a larger deposit.
• After an IVA, most lenders require a waiting period of at least 12–24 months, and often longer, before considering your application.
• You can get a mortgage while on a DMP, but your options will be limited and dependent on consistent repayment history and lender flexibility.
• Reducing unsecured debt improves both your DTI and affordability score, making mortgage approval more likely.
• Checking and correcting your credit report is essential before applying to avoid issues caused by outdated or incorrect information.
• A larger deposit (15–20%) can offset the risks associated with bad credit or recent debt problems and unlock better mortgage deals.
• Using a mortgage broker who works with bad credit cases can significantly improve your chances by connecting you with the right lenders.

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