Find out if your debt load qualifies you for a mortgage or loan.
Your debt-to-income (DTI) ratio compares your monthly debt payments to your gross monthly income. Lenders use it as a key metric to evaluate your ability to manage monthly payments and repay debts. A lower DTI signals less risk to lenders and increases your chances of loan approval.
Front-end DTI (housing ratio) includes only housing costs (mortgage, property tax, insurance) divided by gross income. Back-end DTI includes all monthly debt payments. Lenders primarily focus on back-end DTI for loan qualification.
Conventional loans: back-end DTI under 43% preferred, under 36% ideal. FHA loans: up to 50% with compensating factors. VA loans: guideline of 41% but flexible. Jumbo loans: typically require DTI under 43%.