Debt-to-Income Ratio
Also known as DTI
The share of your monthly gross income that goes toward debt payments, used to judge affordability.
In plain English
DTI compares your total monthly debt payments (including your future mortgage) to your gross monthly income. Lenders generally want your DTI under 43%–50% to approve a mortgage, though the exact limit varies by loan program.
Your DTI is one of the biggest factors in how much you can actually borrow, paying down other debt before applying can meaningfully increase what you qualify for.
Worked example
If your gross monthly income is $6,000 and you pay $1,500 for your (future) mortgage, $100 for a car loan, and $400 for other debts, your DTI is ($1,500 + $100 + $400) / $6,000 = 33%.
Ask your lender both your front-end ratio (housing costs only) and back-end ratio (all debts), since loan programs can set different limits for each, and which one is actually capping how much you can borrow.
Buyers often calculate DTI using take-home pay. Lenders use gross income (before taxes), which makes the ratio look lower than a take-home-pay version would.
Where you'll run into it
Guides and tools on TheBuyingPath that cover debt-to-income ratio in context.
Related terms
Sources
Not sure where this fits in your process?
Answer a few questions and get a personalized homebuying roadmap: where you are now, what comes next, and which terms like this one matter at each step.
Start your roadmap