Credit glossary
Debt-to-income ratio (DTI)
Your monthly debt payments divided by your gross monthly income, a measure lenders weigh alongside your credit score.
The CFPB's example adds a $1,500 mortgage payment, a $100 auto loan and $400 in other debts for $2,000 a month. Against $6,000 of gross monthly income, that's a DTI of 33%. DTI never appears on your credit report and doesn't affect your score, but it often decides a mortgage, and a denial letter can cite it even when your score was fine.
Limits vary by program and lender. VA's underwriting regulation uses 41% as a standard alongside residual income, and FHA's manual underwriting caps ratios at 31% for housing and 43% for total debt when the decision score is under 580. Card minimum payments count, so paying down a card often lowers DTI too. Under Fannie Mae's guide, a revolving account with no reported payment is counted at 5% of its balance.
Guides that go deeper
- Paying down balances before a loan application: timing and rescoresPaying cards down before you apply only helps once the new balance reports. How to time it, which cards to pay first, and how a lender's rapid rescore works.
- Credit scores for VA and USDA loans: who actually sets the minimumVA's underwriting rule never mentions a credit score, and USDA lets its system decide. Why lenders set the real floor and what each program checks instead.
- Credit score for an FHA loan: the 580 and 500 rules, explainedFHA allows scores down to 500 with 10% down and 580 for 3.5% down, but lenders add overlays. How FHA picks your score and what changes in 2027.
Sources
- What is a debt-to-income ratio?, Consumer Financial Protection Bureau
- 38 CFR 36.4340: Underwriting standards, processing procedures, lender responsibility, and lender certification, eCFR
- Mortgagee Letter 2026-11: Updated Minimum Decision Credit Score Methodology for the Implementation of Alternative Credit Scores, U.S. Department of Housing and Urban Development
- B3-6-05, Monthly Debt Obligations, Fannie Mae Selling Guide
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