Question 1

What is a good DTI ratio?

Accepted Answer

A DTI ratio under 20% is considered excellent and qualifies you for virtually all mortgage programs. Between 20-35% is good and acceptable for conventional, FHA, and VA loans. Most conventional lenders cap DTI at 36-43%, while FHA allows up to 50% in some cases. Above 50% severely limits your borrowing options.

Question 2

What debts are included in DTI ratio?

Accepted Answer

DTI includes all recurring monthly debt obligations: mortgage or rent, car payments, student loan payments, credit card minimum payments, personal loans, child support, and any other debt with required monthly payments. It does not include expenses like groceries, utilities, insurance premiums, or subscriptions — only debts that appear on your credit report.

Question 3

How can I lower my DTI ratio?

Accepted Answer

You can lower your DTI by increasing income (asking for a raise, taking a side job, adding a co-borrower) or by reducing debt payments (paying off small debts, refinancing to lower payments, avoiding new debt). Paying off a credit card or car loan before applying for a mortgage can significantly improve your DTI. Even a 2-3% drop can move you into a better approval bracket.

DTI Range	Rating	Mortgage Impact
Under 20%	Excellent	All programs
20 – 35%	Good	Conventional, FHA, VA
36 – 43%	Caution	Near conventional limit
43 – 50%	High	FHA only
Over 50%	Critical	Very limited options

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