How Much House Can I Afford? The DTI Rules
When underwriting mortgage files, traditional banking groups evaluate home affordability using two Debt-to-Income (DTI) thresholds:
- Front-End DTI Ratio (28%): Housing costs (Principal, Interest, Taxes, and Insurance) should not exceed 28% of your gross monthly income.
- Back-End DTI Ratio (36%): Total debt payments (housing costs + car payments + student loans + credit card minimums) should not exceed 36% of your gross monthly income.
Our algorithm evaluates both ratios and isolates the lower of the two limits, establishing a safe parameters profile. By boosting your credit score or reducing monthly installment debts, you can raise your maximum affordability value.
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