My husband and I are ready to buy our first house. We have excellent credit, and are employed, etc. We plan to spend about $200,000, with a 20% down payment. We have $50,000 cash in the bank from a recent settlement, plus our investment account. We have about $20,000 in debt, mostly what we owe on our car, and some credit cards. Before applying for the home loan, should we pay off our debts first, which would leave less cash in the bank but show us as debt free, or let our debts stand for now and have more cash to show in the bank. What looks better to a loan officer- More cash and some debt, or less cash and no debt? We have a very long history of paying on time on our 5 credit cards and our car loan. We're 50 and have life time credit histories. Specfically wondering if those open accounts should be at zero, or at their current high balances when the loan application goes through. We can go either way. We have the cash to either pay off the debts to zero, or to keep in the bank to show we have actual money saved. It can't be both.