What is DTI?
When applying for a Mortgage, your DTI plays a huge factor in qualifying for a mortgage. Debt-to-income (DTI) is a ratio which Loan Officers, like myself, look at to determine whether or not you are able to qualify for a mortgage. DTI is based on your monthly Debt and monthly Income.
There are 2 types of DTI:
– Front End DTI is your monthly housing expense
– Back End DTI is all your monthly debt (housing, credit card, loans, etc)
FHA for example is for those who have less-than-perfect credit and/or are first time home buyers. So compared to a Conventional Mortgage which has a lower Debt-to-Income tolerance, FHA is more lenient and allows borrowers to have a much higher Debt-to-Income (meaning more debt). This is due to the difference in the purpose of the two products. Same goes for USDA and VA loans – they both have different goals for their loan programs and thus have different Debt-to-Income requirements.
For a free mortgage consultation and to understand how Debt-to-Income works – please contact me any time via email, text, or phone call! Thank you and I look forward to speaking with you!