Debt-to-income ratio, or DTI, compares how much you owe each month to how much you earn. Lenders use it to judge whether you can comfortably take on a mortgage payment.
How it is calculated
Add up your monthly debt payments, including the proposed house payment, then divide by your gross monthly income. The result is your DTI, expressed as a percentage.
What lenders look for
Many programs look for a DTI at or below roughly 43% to 50%, though the exact ceiling depends on the loan type and your overall strength as a borrower.
How to improve your DTI
- Pay down credit cards and installment loans
- Avoid taking on new debt before applying
- Increase documented income where possible
- Consider a slightly lower price range
Small changes to your debts can move your DTI into qualifying range. We can tell you exactly where you stand.