DTI (Debt-to-Income Ratio)
Also called: debt to income, debt-to-income, back-end ratio, front-end ratio
The share of your gross monthly income taken up by monthly debt payments, including the proposed housing payment.
Underwriters usually look at two ratios. The front-end ratio counts only the housing payment. The back-end ratio counts the housing payment plus the other monthly obligations reporting on your credit: car loans, minimum card payments, student loans, and support obligations.
What counts is narrower than most people expect. It is monthly obligations on the credit report, not your whole budget: groceries, utilities, and childcare generally do not appear, while a car payment you intend to pay off soon still does.
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Related terms
- Pre-approvalA lender’s conditional commitment to lend after reviewing your credit, income, and assets: stronger than a pre-qualification.
- UnderwritingThe lender’s review of your credit, income, assets, and the property to decide whether the loan can be made.
- PITIPrincipal, Interest, Taxes and Insurance, the four parts of a typical monthly mortgage payment.
- HOA (Homeowners Association)An association governing a community, collecting dues and enforcing rules that can include rental restrictions.
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