Qualifying
Debt-to-income ratio (DTI)
The share of your gross monthly income that goes to debt payments. Lenders use it to gauge how much mortgage you can handle, generally capping total DTI around 43%.
What does debt-to-income ratio mean?
DTI is the number that most often decides a mortgage approval. Lenders look at two figures: the front-end ratio (housing payment ÷ income) and the back-end ratio (all debts ÷ income), the latter mattering most. The common ceiling is 43% back-end, with conventional pricing best under 36% and FHA stretching toward 45–50% with compensating factors. If you're near the line, paying off a single loan can tip a Michigan application from decline to approval — often more effective than raising your down payment.
Common questions
What DTI do lenders allow?
Generally up to 43% total, with the best conventional pricing under 36%. FHA can stretch toward 45–50% with strong compensating factors.
What counts in my DTI?
Your future housing payment plus recurring debts: car loans, student loans, credit-card minimums, and support payments. Utilities and groceries don't count.
How do I lower my DTI to qualify?
Pay off a loan, avoid new debt before applying, add a co-borrower's income, or target a lower price. Closing one car loan can tip a borderline Michigan approval.
Related terms