Why Your Debt-to-Income Ratio Matters for Approval

If you’re thinking about buying a home, your debt-to-income ratio (aka your DTI) is a number you’ll want to get familiar with. It tells lenders how much of your income is already tied up in other debt, like credit cards, car loans, or student loans. The lower your DTI, the better your chances of getting approved for a mortgage. A high DTI doesn’t automatically mean you’ll get rejected, but it can make things trickier. Bottom line: this number can either smooth the way to homeownership or slow things down.

Confused? Don't be. We'll walk you through it.

How to Figure Out Your Debt-to-Income Ratio

It’s actually super simple. Just add up all your monthly debt payments - things like your car loan, minimum credit card payments, and student loans. Then divide that number by your gross monthly income (before taxes). Multiply by 100 to get your percentage.

Say you make $6,000 a month and your total monthly debt is $2,000. Your DTI would be 33.3%. That’s a solid number that most lenders will like.

Need help doing the math? Use this debt-to-income ratio calculator from Dave Ramsey to get a quick snapshot of where you stand.

What’s a Good DTI for a Mortgage?

Most lenders like to see a DTI under 36%. That’s kind of the sweet spot for conventional loans. If your DTI is in the 37 to 43 percent range, you still have options, but it may depend on other parts of your financial picture.

FHA loans are a bit more flexible. They sometimes go up to 50 percent if you’ve got other strong points like good credit or a decent amount of savings. VA loans don’t stick to one number. Instead, they check to make sure you have enough money left over each month after covering your basic expenses.

Can You Get a Mortgage with a High DTI?

You can, but it might take a little more work. Some lenders are open to higher DTIs, especially if you’re going with an FHA or VA loan. Portfolio lenders (the kind that keep the loan instead of selling it off) can also be more flexible.

Just keep in mind that a higher DTI might mean a higher interest rate or a bigger down payment. You might still get the loan, but it could cost more over time.

How to Lower Your DTI (Without Losing Your Mind)

If your DTI is a little too high, don’t stress. There are ways to fix it. The quickest route is usually paying off debt. Focus on high-interest debt like credit cards first. Even paying off a small balance can make a noticeable difference in the long run.

You can also try boosting your income. Pick up a freelance project, take on a few shifts, or negotiate that raise you’ve been thinking about. And if you’re planning any big purchases, like a new car, definitely wait until after you’ve closed on the house. Every monthly payment counts.

Why DTI Really Matters for First-Time Homebuyers

If this is your first time buying a home, your DTI plays a big role in how much you can borrow. It helps lenders figure out what kind of monthly payment you can handle. It also shapes which loan programs you qualify for.

Knowing your DTI ahead of time helps you set a realistic home budget, avoid surprises, and keep your loan process moving smoothly.

Check Your DTI Before You Apply for a Loan

Before you jump into the mortgage process, take a minute to calculate your DTI. You can find a bunch of free DTI calculators online that do the math for you. It’s a quick way to see where you stand and figure out if you need to tweak anything before applying.

Getting your DTI in check early on is one of the easiest ways to boost your chances of getting approved—and land better rates while you’re at it.

At 14 Days to Close, we'll help you crunch the numbers, explore your loan options, and come up with a game plan that fits your goals. Don’t let debt take you out of the running. If you need time to work on your finances, we’ll stay in touch and support you every step of the way!

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