With your credit score of 705, you are in a good place. However, the high DTI ratio means lenders will likely see it as a riskier loan. To increase your chances of being able to obtain the loan, consider the following suggestions:
Research FHA Loans: FHA loans are known for their high DTI ratio allowances, sometimes reaching 57% or higher, specifically for borrowers with great credit. It can also be a great option for you as an aspiring first-time homebuyer.
Investigate Options for DTI Improvement: If possible, consider settling some high-interest debts, such as credit cards or personal loans. Cutting your debt, even by a small margin, can help you achieve a better DTI ratio, increasing your chances of getting better terms on the loan.
Consider Non-QM Loans: Non-QM loans are taken out by borrowers who may be deemed unique borrowers. Some with higher DTI and other specific loan criteria can make them even more appealing. And yes, the interest rates are a notch higher but with fewer restrictions — lenders willing to exchange risk for more remuneration offer such loans. On the other hand, some may still be more attractive, depending on your ante.
Check Multiple Lenders: Certain lenders will have different DTI restraints, especially for first-time home buyers. Contact various lenders and find out who offers the best terms for your circumstances.
Seek Assistance Programs: Several assistance programs are available to first-time home buyers. These programs offer better terms, help with closing costs, or lower interest rates, which overall help make homeownership more realistic.
I can also talk and share more about this program for first-time buyers. Please let me know what else I can help you with.