What Is Debt-to-Income Ratio, and Why Does It Matter
- By Jim Blackburn
- on
- 100 first time home buyer FAQs
DTI Measures How Much of Your Income Goes to Debt
Your debt-to-income ratio is the percentage of your gross monthly income (before taxes) that goes toward paying your debts. That includes:
- Student loans
- Auto loans
- Credit card payments
- Personal loans
- And your future mortgage payment
So if you earn $5,000 a month and $2,000 goes to debt, your DTI is 40%. The lower your DTI, the stronger your financial position looks to a lender.
Lenders Use DTI to Decide How Much You Can Borrow
DTI tells lenders how easily you’ll be able to afford your monthly mortgage payment on top of your existing obligations. A high DTI can raise red flags, even if your credit score is solid. Most mortgage programs require your DTI to be below 43%, though some loans allow exceptions with strong compensating factors.
Lowering Your DTI Boosts Your Buying Power
Want to qualify for more home—or just get approved faster? Start by:
- Paying down credit cards
- Avoiding new debts before applying
- Increasing your income (even temporarily) to shift the ratio
Even small changes can make a big difference. And the best part? Knowing your DTI helps you shop smart and stay in control.
Want to Know Your Debt-to-Income Ratio Today?
📘 Download our free “First-Time Buyer Game Plan” eBook — includes a DTI calculator and budgeting worksheet
💬 Chat live now to calculate your DTI and see what loan programs you may qualify for
📞 Schedule a call with a Stairway Mortgage advisor to build a plan for lowering your DTI and boosting your approval odds
At Stairway Mortgage, we help first-time buyers understand the numbers—
so they can own with confidence and clarity.
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