Equity does not move your DTI directly, but sale proceeds aimed at the right debts absolutely do. DTI measures monthly income against monthly obligations, so cash in hand does not change the ratio by itself. What the equity gives you is two levers: - A bigger down payment lowers your loan-to-value and your payment, and can reduce or eliminate mortgage insurance. That improves affordability, though the effect on your ratio is indirect. - Paying off debt is the direct DTI lever. If you net, say, $50,000 from the sale, using $30,000 to $40,000 of it to clear car payments or credit cards removes those monthly obligations from your ratios entirely. Which move helps more depends on your specific numbers and which ratio is actually constraining you. A borrower tight on total DTI usually gets more from the debt payoff; a borrower whose payment is the problem may get more from the bigger down payment. The comparison takes minutes to model both ways, and it is worth doing before you commit the proceeds in either direction. That is exactly what we sit down and run in the free Roadmap conversation, about 20 minutes, with your real numbers.