The percentage of your gross monthly income that goes toward debt payments — a key underwriting metric that determines how much you can borrow.
Full Definition
DTI is calculated by dividing your total monthly debt payments by your gross monthly income. Lenders look at two types: front-end DTI (housing payment only divided by income) and back-end DTI (all debt payments including housing, car loans, student loans, credit cards, divided by income). Conventional loans typically allow a maximum back-end DTI of 45–50%; FHA allows up to 57% with compensating factors. A lower DTI makes you a more attractive borrower and may qualify you for better rates. If your DTI is too high, you can improve it by paying down debt, increasing income, or buying a less expensive home.
Related Terms
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