Debt-to-Income Ratio — What Lenders Look For

Debt-to-income (DTI) ratio is total monthly debt payments divided by gross monthly income. Many lenders prefer DTI under 43% for mortgages — including the new housing EMI. If you earn $6,000/month gross and pay $1,800 in debts, DTI is 30%.

Front-end vs back-end DTI

Front-end: housing costs only ÷ income (often capped around 28%).

Back-end: all debt payments ÷ income (often capped around 36–43%).

How to improve DTI before applying

Pay down revolving debt, avoid new loans before closing, or increase down payment to lower the proposed EMI.