It is probably not necessary to completely pay off all debt before you apply for a home loan. More importantly, you will want to make sure that all of your accounts are kept current and paid on time. Other factors may also be considered such as yearly income or length of time you've been employed.

While different lenders use different criteria to evaluate credit worthiness, they usually place more weight on the most recent year or two of your credit history. This means that if you pay all your bills on time for two years, you may receive a loan with more favorable terms than if you apply after recent late or non payments.

There is no specfied amount of time that you should wait before applying for a home loan, but you should consider paying off any delinquent accounts and keeping other accounts from falling behind. Then, if you are willing to wait a year or so before applying for a mortgage, continue paying bills on time every month. You may still be able to find a lender who will approve you for a loan before then, but the longer your history of paying your bills on time the more likely you are to receive a loan with more favorable terms. Overall, it's important to shop around and get the best loan for your needs, because what may indicate a poor credit risk to some lenders may not mean that at all to others.