What's the Max Debt-to-Income (DTI) Ratio for a Mortgage?

What's the Max Debt-to-Income (DTI) Ratio for a Mortgage? - Absolute Mortgage Group Inc.

What's the Max Debt-to-Income (DTI) Ratio for a Mortgage?

Learn what DTI is and what the max ratio you can have and still qualify for a home loan.

What is Debt-To-Income Ratio?

What’s the Ideal Debt-To-Income Ratio?

DTI Requirements for Each Loan Type

FHA Loans

VA Loans

Conventional Loans

What's your DTI? Find out!

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Debt-to-income (DTI) ratio determines what mortgage you’re eligible for. So before getting pre-approved, your mortgage advisor will review your income and debts to help you understand where you currently stand.

In this article, we’re going to look at what a debt-to-income ratio is and what to expect when you apply for a mortgage so that you’ll be prepared when you start househunting.

The debt-to-income ratio compares a borrower’s monthly debt payments to their monthly gross income. When someone applies for a home loan, lenders use the ratio to help determine their ability to repay monthly payments and accumulate additional debt.

When you apply for a home loan, you’re required to meet maximum DTI requirements to show your lender that you’re not taking on more debt than you can manage. The lower your DTI, the higher the chance of qualifying for a mortgage since it shows that you’re less likely to default.

The ideal DTI ratio depends on the type of loan you’re applying for. Also, lenders may also set their own maximums.

As a rule of thumb, you want your DTI to be around 36% or lower than that, and it shouldn’t be higher than 43%. Take a look at the guidelines most often used:

36% DTI or less: Excellent

43% DTI: Good

45% DTI: Acceptable (but it depends on the type of loan you’re applying for and the lender.)