Definition
The percentage of your gross monthly income that goes toward debt payments, including the proposed mortgage, credit cards, car loans, student loans, and other obligations. Most lenders require a maximum DTI of 43-50%. Lower DTI ratios improve your chances of approval and may qualify you for better rates.
Related Mortgage Terms
- Preapproval
A lender's written commitment to fund a mortgage up to a specific amount based o...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
- Appraisal
A professional assessment of a property's market value conducted by a licensed a...
- Closing Costs
Fees and expenses paid at the finalization of a real estate transaction, typical...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.