Why Your DTI Matters
When you apply for a mortgage, lenders don’t just look at your credit score—they also look at your Debt-to-Income (DTI) ratio. This simple number is one of the most important factors in determining whether you’re approved for a loan and what kind of rates you’ll receive.
The good news? Once you understand how DTI works, you can take steps to improve it, giving yourself a stronger shot at approval and better terms.
Lendgo helps you go beyond just understanding DTI. We connect you with lenders who work with your financial profile, so you can see real offers and know exactly what you can afford.
What Is Debt-to-Income Ratio?
Your DTI ratio compares your monthly debt payments to your gross monthly income (the amount you earn before taxes).
Here’s the formula in simple terms:
DTI = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100
Your monthly debts may include:
- Your future mortgage payment
- Car loans or leases
- Credit card minimum payments
- Student loans
- Personal loans
Example:
If you earn $6,000 per month before taxes and your total monthly debts add up to $2,000, your DTI is 33%.
How Lenders Use Your DTI
Lenders use your DTI to decide how much you can safely borrow. The lower your DTI, the less risky you look—which means:
- You’re More Likely to Get Approved: Many lenders prefer to see a DTI under 43%, though some loan programs allow higher.
- You May Get Better Rates: Lower DTIs often qualify for lower interest rates and fees.
- You Stay Comfortable: A healthy DTI ensures you can manage your monthly payments without straining your budget.
Tips to Lower Your DTI
Even small changes can make a big difference when you’re preparing to apply for a mortgage. Here are some practical steps:
- Pay Down Credit Cards: Lowering revolving debt can quickly improve your DTI.
- Avoid Taking on New Debt: Hold off on new credit lines or loans until after you close.
- Increase Your Income: A side job, bonus, or extra hours can help tip the math in your favor.
- Refinance or Consolidate Debt: Rolling high-interest debt into a lower payment can free up room in your budget.
Even if your DTI isn’t perfect, Lendgo’s network includes lenders who work with a wide range of financial situations—so you can still find competitive offers.
Why Use Lendgo for Your DTI
Calculating and improving your DTI on your own can be confusing. Lendgo makes it simple:
- Use Our Calculators: Test different home prices and see how they affect your DTI instantly.
- Compare Real Offers: See which lenders are most competitive for your profile.
- Choose the Right Loan: Pick the loan that fits your budget—not one that stretches it too far.
Calculate Your DTI and See Lender Offers
Take the Next Step
Your DTI is one of the keys to unlocking your dream home. Don’t just guess where you stand—see your numbers, compare offers, and take control of your mortgage journey today.
