Debt-to-Income Ratio (DTI)

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The Debt-to-Income Ratio (DTI) is the percentage of your gross monthly income that goes toward paying your monthly debts, including the proposed mortgage payment.

To find it, add up monthly obligations like the mortgage, car loans, student loans, and minimum credit card payments, then divide by your gross monthly income. For example, $2,000 in debts against $6,000 in income gives a DTI of about 33 percent. Lenders use it to judge whether you can comfortably take on a new loan.

Many lenders look for a DTI at or below the low-to-mid 40s percent range, though limits vary by loan program. A lower ratio generally improves your approval odds and terms. See how much you can borrow with our affordability calculator.

Related terms: Closing Costs, Principal