The best personal loans for a high debt-to-income ratio

Don't be surprised if—despite having an exceptional credit score—you may be rejected for a personal loan over something called debt-to-income ratio (DTI).

Although DTI ratios (the amount of debt you owe compared to the money you make) are important risk assessments that lenders use when evaluating potential loan applicants, they are not discussed nearly as often as warnings about bad credit.

To lenders, a DTI ratio of 36% or below is preferred, and anything above 50% is a red flag, signaling a greater risk of default. So, what do you do if you have a high DTI and need a loan?

Seek personal loans for a high debt-to-income ratio

It's always best to reduce your DTI ratio before applying for a personal loan, but if you’re in a pinch and that’s not possible, consider these personal loans for a high debt-to-income ratio.

Secured loans

Secured loans are backed by collateral, such as your car or house. Should you default on repayments, the lender can seize your assets to recoup their losses, which is why they come with lower interest rates and more favorable terms.

Best Egg

Best Egg provides secured personal loans with no fees for early repayment. Terms range from 36 to 84 months. Amounts up to $50,000 are available within 24 hours.

These secured loans are a great option if you're looking for a low-interest loan that eliminates your home as collateral. Instead, the loan is secured by permanent fixtures such as built-in cabinets, light fixtures, and bathroom vanities.

The only disadvantage is you have to be a homeowner. And, if you sell your home and its fixtures before fully repaying the loan, Best Egg has the right to repossess the fixtures from the new owner.

• Loan amount: $2,000-$50,000
• APR range: 5.00%-29.99%
• Credit requirements: 640+
• Ratings: A+ BBB rating and 4.5-stars on Trustpilot, based on over 8,000 reviews.
• Best for auto repairs, moving and relocations, vacations, and other major purchases

Co-signed Loans

A co-signer is someone who agrees to be responsible for your loan if you default. When evaluating your loan application, lenders consider a co-signer's income and credit history.

If your co-signer has a good credit score and low DTI, it may improve your chances of approval because lenders usually treat co-signers as the primary borrowers.

SoFi

SoFi’s personal loans offer the advantages of a top-rate lender with a wide range of loan amounts, flexible repayment terms, and additional perks such as free career and financial counseling.

The company also provides Unemployment Protection to delay your loan payments up to three months. While interest still accumulates during this time, no repayment is required until you can work again.

Additionally, SoFi does not levy prepayment or late fees, and 82% of Personal Loan applications are funded the same day, excluding Direct Pay Personal Loans and Personal Loan refinances.

• Loan amount: $5,000-$100,000
• APR range: 8.99%-25.81%
• Credit requirements: Unspecified
• Ratings: A+ from the BBB and 4.7 stars on Trustpilot from over 6,878 reviews
• Best for consolidating debt, home improvements, weddings, moving expenses, and medical bills

Peer-to-peer (P2P) personal loans

Peer-to-peer lending gives you the chance to borrow directly from others. An online platform simplifies the application, underwriting, and funding process, connecting you quickly with those willing to lend you money.

Prosper

In 2005, Prosper became the first peer-to-peer lending marketplace in the United States. Over the past 15 years, they have loaned $23 billion to 1.4 million people.

Prosper allows you to customize your repayment plan from two to five years and add a co-applicant to increase your chances of getting a loan with a lower interest rate.

Depending on your Prosper Rating, a 1-5% origination fee is added to your APR amount. There is also a processing fee of 5% or $5 (if your payment exceeds $100), whichever is less.

• Loan amount: $2,000-$50,000
• APR range: 6.99%-35.99%
• Credit requirements: 640+
• Ratings: A+ BB rating and a 4.7-star rating on Trustpilot, based on over 12,000 reviews
• Best for consolidating debts, home renovations, and emergency expenses.

Loans to lower your debt-to-income ratio

Debt consolidation is a form of debt refinancing that combines multiple debts into one loan to pay off all your existing debts. One of the easiest ways to lower your DTI is to consolidate credit card debt.

Happy Money

Paying off credit card debt with Happy Money's Payoff Loan™ has increased some members' FICO® scores by up to 40 points. While they charge an origination fee ranging from 0%-5%, there are no other hidden costs.

Happy Money's Member Portal and mobile app allow you to easily monitor payments, track progress, and contact the support team for loan servicing needs.

Their Payoff Loan™ lets you pay off your credit cards faster by consolidating high-interest card balances into one monthly payment at a fixed rate and term of your choosing.

• Loan amount: $5,000-$40,000
• APR range: 11.52%-24.81%
• Credit requirements: 640+
• Ratings: A+ BBB rating and 4.2-stars on Trustpilot from over 300 reviews
• Best for consolidating credit card debt

Tips for choosing personal loans with a high debt-to-income ratio

Some tips to make borrowing money simpler when your monthly repayments start to hit:

• Choose short-term loans: Shorter loans have lower interest rates; just be sure that you can afford the higher monthly payments.
• Prioritize lower interest rates: Once you've found a lender, don't be afraid to negotiate, especially if you have a good credit score.
• Only borrow what you need: The more money you borrow, the higher your monthly payments will be.
• Consider a credit card: If you only need to make a small purchase, consider a credit card instead of a personal loan. Credit cards usually have lower interest rates, making them great for short term borrowing, especially if they improve your credit utilization rate.

Although a high debt-to-income ratio is not ideal, a variety of high DTI personal loans are available. Additionally, talking to a financial advisor can help you choose the best loan and create strategies to reduce your DTI ratio while successfully managing your debt.