Debt Information

Lenders want to be sure that you can handle the mortgage payments before they approve your mortgage. They accomplish this buy comparing your monthly income to your monthly debt. This is your debt-to-income ratio (DTI). Most lenders want to see a DTI less than 42%. Some programs, however, allow DTI’s to go to 50% and beyond.

Your monthly debt is normally determined by the liabilities that are found on your credit report, plus the PITI (Principal, Interest, Taxes and Insurance) of your new mortgage. They understand that you will have other bills, like utilities, car insurance, groceries etc. However, unless it is listed on your credit report, it is not normally factored into DTI.

For more information of monthly debt and how it effects your mortgage, see the following links:

Debt-To-Income Ratios

How Much You Can Afford