Debt-to-Income (DTI) Ratio

Debt-to-Income (DTI) is a core underwriting metric that measures a borrower’s capacity to manage monthly payments. It is calculated by dividing total recurring monthly debt obligations (credit card minimums, student loans, auto loans, and the proposed new mortgage payment) by gross monthly income. While conventional underwriting typically prefers a DTI under 45%, government-insured programs like FHA can permit up to 50% to 55% with strong compensating factors.