What is Debt-to-Income Ratio (DTI)?
Monthly debt payments divided by gross income. Most lenders want under 43%, with exceptions for strong compensating factors.
Debt-to-income ratio (DTI) compares your monthly debt payments to your gross monthly income. Lenders use two DTI calculations: front-end (housing costs only) and back-end (all debts including housing). Most lenders prefer back-end DTI under 43%, though exceptions can be made with strong compensating factors. Lower DTI improves approval odds and may qualify you for better rates.