Debt-to-Income Ratio (DTI)
Your debt-to-income ratio is the percentage of your gross monthly income that goes toward recurring debt obligations, including your proposed mortgage payment.
Lenders calculate two DTI ratios: front-end (housing expenses only) and back-end (all monthly debts combined). Most loan programs set maximum back-end DTI limits — typically between 43% and 50% — though exceptions exist with strong compensating factors.
A high DTI does not automatically disqualify you. It means the underwriter will look more closely at the full picture — reserves, credit history, employment stability, and residual income — to determine whether the loan is sustainable.
Why This Matters: Your DTI is one of the most important numbers in your mortgage qualification. Understanding it before you apply gives you time to pay down debts strategically and improve your buying power.
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