Why agents care
DTI explains why two buyers with the same income can afford very different homes. Helping buyers see their DTI early, privately, lets you set a realistic search range without discussing their finances in detail.
Glossary term
Debt-to-income ratio (DTI)
Debt-to-income ratio compares monthly debt payments with gross monthly income. The front-end ratio uses the housing payment alone. The back-end ratio adds other debts such as car, student loan and minimum card payments. Lenders use DTI, along with credit and other factors, to decide how much a borrower can borrow.
Example
Example: $8,000 gross monthly income, a $2,400 housing payment and $800 in other debts gives a front-end DTI of 30% and a back-end DTI of 40%.
Questions by topic
Debt-to-income ratio (DTI): common questions
What DTI do lenders allow?
It depends on the program and borrower. Many look for back-end ratios in the low-to-mid 40s or less, with some flexibility.
Does DTI use gross or net income?
Gross income, before taxes and deductions.
Put these numbers in front of your visitors
Calculators with built-in definitions, free on the Agent plan.