{"id":1488,"date":"2021-12-13T11:21:37","date_gmt":"2021-12-13T16:21:37","guid":{"rendered":"https:\/\/blog.veteransloans.com\/?p=1488"},"modified":"2025-12-19T15:14:52","modified_gmt":"2025-12-19T21:14:52","slug":"how-debt-to-income-dti-impacts-your-mortgage","status":"publish","type":"post","link":"https:\/\/www.veteransloans.com\/resources\/how-debt-to-income-dti-impacts-your-mortgage\/","title":{"rendered":"How Debt-to-Income (DTI) Impacts Your Mortgage"},"content":{"rendered":"[et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” background_image=”http:\/\/173.255.228.252\/resources\/wp-content\/uploads\/2021\/12\/dti.jpg” min_height=”250px” height=”100%” custom_margin=”0px|0px|0px|0px|false|false” custom_padding=”0px||0px||false|false” saved_tabs=”all” global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ _module_preset=”default” custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_post_title _builder_version=”4.16″ _module_preset=”default” title_font=”|700|||||||” title_text_align=”center” title_font_size=”29px” meta_text_align=”center” background_color=”#FFFFFF” height=”100%” custom_margin=”0px||0px||false|false” custom_padding=”100px|15px|100px|15px|false|false” global_colors_info=”{}”][\/et_pb_post_title][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” custom_padding=”30px||0px||false|false” global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.27.4″ _module_preset=”default” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″]\n

Have you ever heard someone say you should only spend 36% or less of your income on bills?<\/em> The concept they are referring to is that of debt-to-income, or DTI.\u00a0 Debt-to-income divides the total of all monthly debt payments by your gross monthly income, giving you a percentage. As a lender, we focus on your projected DTI calculated with your new monthly mortgage payment, because it\u2019s a representation of your ability to pay your bills. Borrowers with high DTIs often have more trouble making their payments.<\/p>\n

How DTI Affects Your Mortgage Approval Status<\/h2>\n

Whether you qualify for a mortgage depends on your mortgage lender\u2019s standards and requirements – often using DTI, credit history<\/a>, and gross income to determine if a borrower can repay a loan. To determine your DTI ratio, take the sum of all your monthly debts such as revolving and installment debt payments, divide by your gross monthly income and multiply by 100. If your ratio is lower, you may have an easier time getting a mortgage.<\/p>\n

Here\u2019s an example:<\/strong> A borrower with rent of $1,200, a car payment of $200, and credit card payment of $100 and a gross monthly income of $6,000 has a debit income of 25%.<\/p>\n

A debt-to-income ratio of 25% is considered low. The Federal Reserve<\/a> considers a DTI of 40% more of a sign of financial stress. Note that a debt-to-income ratio of 43% is generally the highest mortgage lenders will accept.<\/p>\n

DTI does not distinguish between different types of debt. Credit cards carry higher interest rates than student loans, but they\u2019re lumped in together in the DTI ration calculation. By transferring your balances from a high-interest rate credit card to a low-interest credit card, you monthly payments would decrease, lowering your DTI ratio.<\/p>\n

Here\u2019s a general rule-of-thumb breakdown:<\/p>\n