Definition
The percentage of your gross monthly income that goes toward all debt payments. Lenders use DTI to determine how much you can afford to borrow. Most conventional loans require a DTI below 45–50%.
Related Credit & Qualification Terms
The percentage of your gross monthly income that goes toward all monthly debt obligations, housing payment plus credit cards, car loans, and student loans. Most lenders prefer a back-end ratio below 43–50%.
A detailed history of your borrowing and repayment behavior, compiled by the three major credit bureaus: Equifax, Experian, and TransUnion. Lenders pull your credit report to assess your likelihood of repaying the loan.
A credit score ranging from 300 to 850, developed by Fair Isaac Corporation and used by most mortgage lenders. Scores of 740+ typically qualify for the most competitive rates; FHA loans are available down to 580 with a 3.5% down payment.
The percentage of your gross monthly income that goes toward total housing costs, principal, interest, taxes, insurance, and HOA dues. Most conventional lenders prefer a front-end ratio below 28%.
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