Definition
Monthly debt payments divided by gross monthly income. Mortgage lenders generally like a total DTI at or below 36%, with roughly 43% as a common ceiling for qualified mortgages.
Why it matters
DTI is the number lenders actually underwrite against, and it caps the house you can buy no matter how good the rate. Managing it before an application is as important as managing the credit score.
Example
With $7,000 gross monthly income and $2,100 of debt payments (car, student loan, expected mortgage), DTI is 30%: inside the comfortable range. Adding a $500 car payment first would push it to 37% and shrink the approvable mortgage.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.