Mortgage Glossary
Debt to Income Ratio
Also called: dti, debt to income, debt ratio
Definition
Your monthly debt payments divided by your gross monthly income, expressed as a percentage. Lenders use it to judge whether a new mortgage payment fits your budget.
Why it matters
DTI is one of the most common reasons a loan amount is limited. Paying down a car loan or credit card can change what you qualify for.
Example
$2,000 of monthly debts including the new mortgage payment against $6,000 of gross income is a 33% DTI.
Related terms
- Loan to Value
- The loan amount divided by the property value. A $200,000 loan on a $250,000 home is an 80% LTV.
- Credit Score
- A number lenders use to summarize credit risk. Mortgage lenders typically use specific FICO versions and often the middle of three bureau scores.
- Reserves
- Verified funds left after closing, usually measured in months of the housing payment. Requirements are higher for investment properties and some jumbo loans.
Written by
Manny Oloyede, Mortgage Broker
NMLS #1824463 | Ultimate Mortgage Brokers LLC NMLS #2619461 | Licensed in OH | KY | NC | PA | SC | TN | TX
I have worked in mortgage lending since 2018 out of the Akron / Cuyahoga Falls Branch, helping buyers, homeowners and investors across Northeast Ohio and every state where I am licensed. These guides reflect the questions I answer most often, written the way I would explain them on a call.
General education only, not financial, legal or tax advice, and not a commitment to lend. Guidelines vary by program and change over time. Manny Oloyede, NMLS #1824463. Ultimate Mortgage Brokers LLC, NMLS #2619461. Licensed in OH | KY | NC | PA | SC | TN | TX. Equal Housing Opportunity.
Want this applied to your actual numbers?
Definitions are the easy part. What matters is how the guideline reads against your income, credit and property.