Why Your DTI Ratio Can Matter More Than Your Credit Score
Your debt-to-income ratio (DTI) is the percentage of your gross monthly income that goes toward debt payments, and it’s one of the most important numbers lenders use to decide how much you can borrow. Even with excellent credit, a DTI ratio above what a lender allows — typically around 43% including the new mortgage payment — can limit your loan amount or disqualify you entirely.
If your DTI ratio is higher than you’d like, a few common strategies can help:
- Pay down high-balance debts like credit cards before applying
- Avoid taking on new debt, like a car loan, in the months before applying
- Consider a smaller loan amount or a larger down payment to reduce the new payment
Our home loan eligibility calculator factors in your existing debt alongside your income. Once you know your realistic loan amount, our home affordability calculator can translate that into an actual home price range.