What Is Debt-to-Income Ratio?
DTI compares a borrower's total monthly debt payments to their gross monthly income, expressed as a percentage — one of the main factors lenders use to decide how much they'll lend.
Formula
DTI = Total Monthly Debt Payments ÷ Gross Monthly Income × 100
Example
A borrower with $7,000 in gross monthly income and $1,750 in total monthly debt payments (including the new mortgage) has a 25% DTI.
Why It Matters
Most conventional lenders cap total DTI around 43-50%, so a high DTI can limit how much home a buyer qualifies for even with strong income.
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