Debt-to-Income Ratio (DTI)
mortgageAlso known as: DTI, debt-to-income
Updated · Written and reviewed by Konstantin Iakovlev
Detailed explanation
Front-end DTI = monthly housing costs (PITI + HOA + PMI) ÷ gross monthly income; should be ≤28%. Back-end DTI = total monthly debt payments ÷ gross monthly income; should be ≤36% for conventional, sometimes 43-45% for FHA. A worker earning $100K/year ($8,333/month gross) can afford max ~$2,333 housing payment (28%) and total debts ≤ $3,000 (36%). High student loans, car payments, or credit-card debt reduce home affordability significantly. Some lenders use Manual Underwriting and accept higher DTIs with compensating factors (large reserves, strong credit).
Use these calculators to apply this concept
Related mortgage terms
PITI (Principal, Interest, Taxes, Insurance)
PITI is the four components of a typical monthly mortgage payment: Principal (loan paydown), Interest (lender fee), Taxe...
Private Mortgage Insurance (PMI)
PMI is insurance protecting the lender if you default on a conventional mortgage with less than 20% down. PMI premiums a...
Amortization
Amortization is the gradual paying down of loan principal over time through scheduled monthly payments. Each payment inc...
Home Equity Line of Credit (HELOC)
A HELOC is a revolving credit line secured by your home equity. Like a credit card, you borrow against an approved limit...
Conforming Loan
A conforming loan meets Fannie Mae / Freddie Mac maximum loan limits and underwriting standards, making it eligible for ...
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