Debt-to-Income Ratio

The “debt-to-income ratio“, or “DTI ratio” as it’s known in the industry, is the way a bank or lender determines what you can afford in the way of a mortgage payment. By dividing all of your monthly liabilities by your gross monthly income, they come up with a percentage. This figure is known as your DTI, and must fall under a certain percent in order to qualify for a mortgage.

The maximum debt-to-income ratio will vary by mortgage lender, loan program, and investor, but the number generally ranges between 40-50%.

Update: Thanks to the new Qualified Mortgage rule, most mortgages have a maximum back-end DTI ratio of 43%. There is a temporary exemption for many loans, but a lot of lenders still want this number to be under 43%!

Let’s look at a basic example of debt-to-income ratio:

$120,000 annual gross income as reported on your tax returns/pay stubs

  • Monthly liabilities: $3,500
  • Monthly gross income: $10,000
  • 35% debt-to-income ratio

In this example, your debt-to-income ratio would be 35% ($3,500/$10,000).

However, the debt-to-income ratio goes into greater detail and comes up with two separate percentages, one for all of your monthly liabilities divided by income (back-end DTI ratio), and one for just your proposed monthly housing payment (including taxes and insurance) divided by income (front-end DTI ratio).

Front-End and Back-End Debt-to-Income Ratios

So in the above example, if your proposed monthly housing payment makes up $2,000 of your $3,500 in monthly liabilities, your front-end DTI ratio would be 20%, and your back-end DTI ratio would be 35%. Many banks and lenders require both numbers to fall under a certain percentage, though the back-end DTI ratio is more important.

You may see a debt-to-income requirement of say 30/45.  Using the example from above, your front-end DTI ratio of 20% would be 10% below the 30% limit, and your back-end DTI ratio of 35% would also have 10% clearance, allowing you to qualify for the loan program, at least as far as income is concerned.

*If you own other property with a mortgage, it should be included in the back-end DTI ratio because it’s not part of the new loan you are applying for.

Max DTI Ratio for FHA Loans

The max DTI for FHA loans depends on both the lender and if it’s automatically or manually underwritten.  Some lenders will allow whatever the AUS (Automated Underwriting System) allows, though some lenders have overlays that limit the DTI to a certain number. These limits can also be reduced if your credit score is below a certain threshold.

For manually underwritten loans, the max debt ratios are 31/43. However, for borrowers who qualify under the FHA’s Energy Efficient Homes (EEH), “stretch ratios” of 33/45 are used.

These limits can be even higher if the borrower has compensating factors, such as a large down payment, accumulated savings, solid credit history, potential for increased earnings, and so on.

To sum it up, if you can prove to the lender that you’re a stronger borrower than your high DTI ratio lets on, you might be able to get away with it. Just note that this risk appetite will vary by lender.

Also note that mortgage insurance premiums are included in these figures.

Max DTI Ratio for VA Loans

For VA loans, the same automated/manual UW rules apply.  If you get an AUS approval, the maximum DTI ratio can be quite high.

However, if it’s manually underwritten then the maximum debt-to-income ratio is 41% (back-end).  There is no front-end requirement for VA loans.  Again, as with FHA loans, if you have compensating factors and the lender allows it, you can exceed the 41% threshold.

Specifically, if your residual income is 120% of the acceptable limit for your geography, the 41% DTI limit can be exceeded, so long as the lender gives you the go-ahead.

In other words, most of these limits aren’t set in stone, assuming you’re a sound borrower otherwise.

Max DTI Ratio for USDA Loans

For USDA loans, the max DTI ratios are set at 29/41.  However, if the loan is approved via the Guaranteed Underwriting System (GUS), these ratios can be exceeded somewhat, similar to FHA/VA loans.

Long story short, if you have a credit score of 660 or higher, solid employment history, and the potential for increased earnings in the future, you may get approved for a USDA loan with higher qualifying ratios.

How to Calculate Your DTI Ratio

If you’d like to figure out your debt-to-income ratio, simply take your average gross annual income based on your last two tax returns and divide it by 12. Then add up all your monthly liabilities and divide that total by your monthly income and voila. Keep in mind that you’ll need a free credit report to accurately see what all your monthly payments are.

The credit report will show you what your minimum or monthly payment is for each tradeline, which makes it simple to add them up. Some banks and lenders allow installment credit cards such as those issued by American Express to be excluded from the debt-to-income ratio as they often account for thousands of dollars a month, and likely get paid off in full monthly.

The debt-to-income ratio is a great way to find out how much house you can afford, as well as the maximum mortgage payment you qualify for. Simply add up all your liabilities and your proposed mortgage payment plus taxes and insurance to see what type of loan you can take out.

Stated Income to Avoid Debt-to-Income Ratio Problems

Most mortgage brokers that work with potential homeowners will avoid full documentation loans if they feel the borrower won’t qualify for the loan based on their gross income alone. For this reason, banks and lenders offer reduced documentation loans such as SIVA (Stated income, verified assets) loans, and No Ratio (no income, verified assets) loans.

Many people think reduced-doc loans are usually just stretching the truth, but they can also come in handy for borrowers who have increased their gross income recently, or those with complicated tax schedules, usually self-employed borrowers.

Qualifying Rate for Debt-to-Income Ratio

One important thing to keep in mind is the qualifying rate banks and lenders use to come up with your debt-to-income ratio. Many borrowers may think that their start rate or minimum payment is their qualifying rate, but most banks and lenders will always qualify the borrower at a higher rate to ensure the borrower can handle a larger amount of debt.

For example, a borrower may be on a negative-amortization loan program with a monthly payment of only $1,000, but their interest-only payment is actually quite higher, at say $2,500.

For a bank or lender to effectively gauge the borrower’s ability to handle debt, especially once the minimum payment is no longer available for the borrower, the lender must qualify the borrower at the higher of the two payments. This gives the lender security and prevents under-qualified borrowers from getting their hands on mortgages they can’t really afford.

Borrowers should also note that most debt cannot be paid off to qualify. If you have debt on credit cards or other revolving accounts and plan to pay them off with your new loan, their monthly payments will still be factored into your DTI. This prevents a borrower from refinancing their current mortgage or buying a new home and piling all their outstanding debt on top of the mortgage, just to rack up more debt on those cards a month later.

It also allows the bank or lender to gain a true measure of a borrower’s ability to handle debt. However, lenders will usually allow borrowers to payoff installment debt to qualify so long as they have sufficient, verified assets.

Download my Excel Debt-to-Income Ratio calculator below to figure out what you can afford: Debt-to-Income Ratio Calculator

Read more: Do I qualify for a mortgage?


  1. Kyle September 24, 2013 at 10:08 pm -

    Are lenders allowed to charge more for higher DTI ratios?

  2. Colin Robertson September 25, 2013 at 9:52 am -

    Yes, certain lenders may add adjustments to fee for DTI ratios between a certain percent, or above a certain percent. So if your DTI is above 50%, they might charge .50% as an adjustment to account for what they see as higher risk. And if your DTI is between say 45.01-50%, they might charge something like .25%.

  3. Evangeline February 9, 2014 at 5:39 pm -

    So if they charge fees for a higher DTI, is the mortgage rate higher as a result? Thanks.

  4. Colin Robertson February 10, 2014 at 12:17 pm -

    It depends, if the fees are enough to bump your rate at least an .125 higher, then yes. But you might just have to pay more in closing costs to get the same rate, all else being equal.

  5. Curtis February 22, 2014 at 4:12 pm -

    I’m considering making an offer on a home this spring. What steps can I take to lower my debt to income ratio over the next couple months?

  6. Anna February 23, 2014 at 3:51 pm -

    Are deferred student loan payments included in the DTI ratio for a mortgage? I’m wondering because I don’t need to start paying back my loan until 2015.

  7. Colin Robertson February 24, 2014 at 10:30 am -


    Basically reducing your outstanding debt is the name of the game if you want to lower your DTI. That means paying down credit card balances, auto loans, etc, and avoiding opening new lines of credit. The less you owe, the smaller your monthly obligations will be. It could also boost your credit score. Just be sure not to deplete your assets in the process.

  8. Colin Robertson February 25, 2014 at 3:50 pm -

    For conventional loans, deferred student loan payments must be included in the DTI. However, for FHA/VA lending, student loans deferred more than a year (12 months) after loan closing can be omitted from the DTI calculation.

  9. Margaret September 1, 2014 at 6:09 am -

    I have approached the refi process over the past six months several times to no avail. I have been turned down because my dti 48-50%. I am on a fixed income and retired. I desperately need to refi and believe I can managed the extra $200-300 a month vs. the debt repayment of $1000 I have now. Who will help me refi?

  10. Colin Robertson September 2, 2014 at 11:38 am -


    Have you tried brokers or just individual banks? A broker will be able to shop you with a slew of lenders at once to find someone that specializes in higher DTI and fixed income.

  11. Jeremy October 10, 2014 at 9:04 pm -

    My current front end DTI is .28%
    My back end is .478%
    What’s the chances of myself getting a loan

  12. Colin Robertson October 11, 2014 at 10:30 am -


    Your chances will be a lot better if you can get below 43% because that’s the new Qualified Mortgage cutoff. So if you have large monthly debt payments, perhaps paying off those can lower it, or putting more money down/finding a cheaper house. But there should still be options if your overall credit profile is good. Shop around to see what’s out there.

  13. Melissa October 16, 2014 at 5:41 am -

    My current front end DTI is 21%
    My back end is 21%
    What are the chances of my getting a loan with these percentages and a credit score in the mid 600?

  14. Colin Robertson October 16, 2014 at 9:10 am -


    Your DTI and credit score shouldn’t hinder you, though you could work to improve your credit score for more options and more favorable pricing. And are you including a future mortgage payment in your back-end number? The rule of thumb nowadays is to stay below 43% to avoid extra scrutiny.

  15. Kal October 29, 2014 at 4:10 pm -

    we are looking at buying a new house in an area that we really like. This house is on the market for 1M. Our current house is paid off and its worth approx. 400,000. I plan on putting all of the 400k as down payment. We have zero debt (no car payments, no CC payments, etc..). Credit score in the upper 800s. My question is this: I’m concerned that the DTI may be looked as too high showing an annual salary of $110,000. Do you think we will have difficulty qualifying for a loan.

  16. Colin Robertson October 30, 2014 at 10:24 am -


    The $400k down payment and zero debt will certainly help your cause, but you also have to consider taxes on the $1 million property, homeowners insurance, etc. It could be close to some lenders’ cutoffs but you should use a calculator/get pre-qualified or pre-approved to be sure you’re factoring in everything properly.

  17. Joy Stainbrook November 1, 2014 at 7:44 pm -

    I am confused about the front end dti ratio you figured in the above example. How did you get 20% front end with 2000.00 mortgage and 3500.00 in debt?

  18. Colin Robertson November 3, 2014 at 9:05 am -


    The example assumes $10,000 in income, so $2,000 going toward housing costs would be 20% of that $10,000. The $3,500 is the total monthly debt including housing, making the back-end DTI 35% based on that $10,000.

  19. GB January 8, 2015 at 11:09 am -

    Colin –

    I just finished your great article on DTI. Thanks for posting. But I am curious if my situation is unique and wanted to ask your opinion.

    We have zero current debt and a gross household income of $235,000/yr. A conservative front end ratio limits us to roughly $900,000 purchase price, while an aggressive back end ratio might qualify us for $1,400,000. That’s a big difference between the two, and I doubt we will ever accrue other debts (just as a matter of personal preference/philosophy).

    Do you think we’d ever qualify for something more than the front-end ratio ?

    If you have time to give some quick input, it would be sincerely appreciated. Thanks.

  20. Colin Robertson January 8, 2015 at 11:22 am -

    Hey GB,

    It depends on the lender’s risk appetite, as you’ll be in the jumbo loan realm where DTI maximums vary quite a bit. I’ve heard of lenders that allow the max DTI ratios to be the same for front- and back-end, but others that limit the front-end ratios significantly. Even if you say you won’t accrue other debt in the future, there’s no absolute guarantee you won’t. So approving a loan with a very high front-end DTI can be risky. It might be wise to get a pre-approval with a bank or two to see what you can truly afford based on their maximum qualifying ratios, then shop for a property from there, seeing that there’s quite a range in your situation.

  21. Maria January 16, 2015 at 9:20 am -

    Hi Colin,

    Hope you can clear some thing up for me, because I am very confused with all this DTI calculations :-(

    I am in a bit of a pickle here. I defaulted on my mortgage after my brutal divorce and am in an active foreclosure with Motion to Foreclose court date set in few weeks. I had applied for a loan modification back in July and got an offer from my mortgage bank-Chase, but the way they calculated my income, including my temporary Overtime pay I get, somehow they added an extra $10K to my income (assuming that I was going to make that OT pay for the next 30 years). So whatever mortgage amount they offered me was still high for me. I am re-applying again for a new Loan Modification, but wanted to figure out what to submit as my income, so that bank won’t miscalculate my income again. In other words, I am still making some OT, should I stop working OT and submit only my straight pay amount on the Loan Mod? But then I’m afraid that it may not be enough and won’t qualify me for a Loan Mod. I just want to get a fair Loan Mod with lowered mortgage payments that I can afford. I can’t figure out this DTI system though, maybe you can help?

    My gross yearly income is $47,740.16 / Monthly Gross – $3672.32
    Monthly Net after all the deductions – $1216.16
    With overtime my monthly Gross is – $5037.08,
    Monthly Net with OT-$1673.15
    My Current monthly mortgage payment including taxes $1808.57 + Monthly HOA-$390.00
    other monthly bills about – $500.00
    So with all these I’m trying to determine if I stop doing OT and only submit my straight pay for Loan Mod, how is my DTI ratio is going to be calculated, would I be making enough to qualify for a Loan Mod?

    Please help, any advice you can give me would be greatly appreciated.



  22. Colin Robertson January 16, 2015 at 10:08 am -


    If your gross annual income is $47,740, your monthly gross should actually be about $3,978 ($47,740 divided by 12). Generally, overtime income should only be included in DTI calculations if it is expected to continue and has been received for the past couple years. But as you mentioned, I don’t know if Chase will offer you a loan mod without the overtime pay included. If they do offer you a lower rate/payment without it, I’m assuming you’d rather have it that way, but that’s between you and them and I don’t know their rules. Best of luck.

  23. Jared January 23, 2015 at 4:37 pm -

    I get the back-end ratio, as a bank wouldn’t want to lend to a borrower who’s too leveraged.

    But the front-end ratio seems arbitrary. I have no other debt. If a 40% back-end DTI is okay, why can’t I allocate all my debt to my house?

  24. Colin Robertson January 24, 2015 at 11:49 am -


    Imagine after taking out a mortgage that you take on other non-housing related debt…all of a sudden your high front-end ratio becomes a problem because you’ve compounded it with a bunch of other debt. Once you own a home you might need to apply for more credit for things like repairs, maintenance, furnishings, etc. And the lender has no control over what you do after you get your mortgage.

  25. bob February 3, 2015 at 12:36 pm -

    Do 5% down conventional loans ever allow for more than 36% DTI? My only debt is student loan debt. I am not interested in FHA.

  26. Colin Robertson February 3, 2015 at 2:03 pm -


    Fannie and Freddie allow DTIs up to 45%, or even higher with strong compensating factors, but the outcome may depend on your loan/borrower attributes and the lender’s own policies.

  27. Candy McClain February 12, 2015 at 9:06 pm -

    I recently inherited property and need to refi. I’m married and currently have a mortgage with my husband in our primary residence. Trying to refi the inherited property as sole borrower, which would be considered an investment property. My broker is telling me that my DTI is too high due since the calculation is using the entire amount of my residence mortgage. Is there a way to only have half of that considered, since the that loan was based on our joint income and co borrowers?

  28. Colin Robertson February 13, 2015 at 6:00 pm -


    Sometimes the existing mortgage can be excluded from your DTI if you can show (with cancelled checks or some other proof) that the co-borrower has been consistently making all the payments on their own. If you’re not far off DTI-wise is it possible to go with a smaller loan amount to get that number down?

  29. Nick February 20, 2015 at 4:55 pm -

    my DTI is 63% I am self employed. I did not take a salary this year that’s why my DTI is so high. I could kick myself for this…live and learn….. are there any lenders out there that will do a cash out refi with that 63% or a line of credit? my credit score is 775, my spouse is 733.


  30. Colin Robertson February 21, 2015 at 4:40 pm -


    Maybe speak with an experienced mortgage broker (or two) to see if they can work something out for your situation.

  31. Scott Cerbin March 2, 2015 at 2:37 pm -

    I’m self employed and 2013 showed my lowest income in the last 5 or more years. However last year was great. The problem is the average of the two fictionally lowers my DTI to around 50%. On last year alone (and all the years before that) I am well within the allowable 43%. What can I do to refi? I have a non-FHA loan and wan to take advantage of the record low rates. My credit score is excellent. Im really frustrated that I cannot get into a premium product because of a fiction on paper.

  32. Colin Robertson March 2, 2015 at 5:35 pm -

    Some lenders still offer loans with DTI ratios above 43%, though it is less common thanks to the QM rule.

  33. Heather March 3, 2015 at 11:39 pm -

    We are in a interest only loan which is going to convert this August and are looking to refinance. I recently took on a second job (last month) as well as received a raise on my first job. How long will I need to wait before applying for a mortgage refinance. Will banks take only one month of pay stubs to verify my income. I fear that if they only look at our past two years of taxes we won’t qualify. Combined between myself and my husband we’ll make $100,000 and need to refinance a $517,000 loan. We have no debts great credit and our DTI is 36%.

  34. Colin Robertson March 4, 2015 at 1:12 pm -


    Lenders generally ask for your two most recent pay stubs along with your two years of tax returns. They do so to ensure income is stable and predictable. A broker could be helpful to shop with a variety of lenders all at once to find some possible options for you.

  35. shaun March 7, 2015 at 5:29 pm -

    If your student loans are in deferment when applying for a housing loan, how exactly do you add that to your monthly debt?? When the loans are no longer in deferment I have no idea how much I will be required to pay monthly.

  36. Steve March 7, 2015 at 6:07 pm -

    We are currently looking at a VA Loan. I am self employed, have a credit score of 794, will be putting down 40 thousand on a 315 thousand dollar home, and will be paying off all other debts.

    The obvious problem is that what I show on paper as income is much less than I actually make. Combining the past 2 years, my payment would put me at 46% DTI. My true DTI, just off of my last years taxable income is appx 30%. My Loan Officer is pretty confident. Her cover letter gave some very good contributing factors, Is that 46 too difficult to look over for an underwriter, or do my other factors outweigh that risk. I guess my questions are is that just too difficult of a number for an underwriter to justify?

  37. Colin Robertson March 8, 2015 at 11:30 am -


    Lenders will generally ask for the proposed monthly payment or use 1-2% of the outstanding balance to determine the monthly debt obligation. For FHA financing the debt can be ignored if deferred for at least 12 months from loan closing. So it depends on the loan type and lender, and what documentation you can provide. It may be helpful to know the actual eventual monthly payment because it will probably be lower than 1-2% of the balance.

  38. Colin Robertson March 9, 2015 at 11:47 am -

    I’ve heard of higher DTIs getting approved for VA financing, but you’ll have to wait and see.

  39. elizabeth March 19, 2015 at 8:19 am -

    I plan to apply for a home loan in a month or 2, but I’m waiting for one more hard inquiry to fall off to improve my score and to have most of my credit cards paid off. I make about $1200 to $1400 a month between two jobs. I spend about $350 to $375 a month on my dti and my credit score is 634. What are my chances of getting approved. Plus I have a down payment between $8000 to $10,000 to put down. But I want to keep my loan range $60,000 or less.

  40. Colin Robertson March 19, 2015 at 8:27 am -


    I can’t tell you with certainty that you’ll be approved, but if you get your score up and your income/jobs have been steady, a $60k loan seems reasonable. Your assets should also help. Good luck!

  41. Justin March 27, 2015 at 5:58 pm -

    My loan is Not backed by Freddie/Fan and I have ARM loans with the balance on Loan 1 at $190,000 with 6.5% interest rate and Loan 2 $47,000 with interest rate 9.45%.
    Home is underwater based on current market sales.
    I am now 1099 and current before tax income is $17,4200 and monthly expenses is $4,575.44. I am not living in the home either bc my work is in a different state. What are my options besides selling?

  42. brie March 27, 2015 at 7:07 pm -

    Colin, my mid score is 695 and my monthly gross is 5720 would i still get a loan? my lo is saying my back end ratio is .5 over… i resubmitted everything for him to give to the underwriter. my total monthly debt with mortgage included is 2455 no late payments on my credit and 2 of my cc are close to the max bc of recent wedding

  43. Colin Robertson March 30, 2015 at 10:38 am -


    That sounds like a tricky situation based on the occupancy and high LTV, might want to speak with some brokers/lenders about potential options.

  44. Colin Robertson March 30, 2015 at 10:40 am -


    Since you can’t change your income, maybe you can reduce some of your other monthly liabilities to get your DTI lower or put more money down to reduce the mortgage payment?

  45. Manny April 1, 2015 at 8:48 pm -

    My issue is a bit more involved but here is the crux of the matter. My income fluctuates from year to year. I got a 1 million dollar loan, however the two years that the bank asked for, my monthly average was about $6,400 my Mtg. payments are $6,900. I paid it for some time but I’ve run into a severe medical issue and I find it difficult paying my mortgage. Does the bank have any responsibility being that my DTI was at over 120%. There was additional money given to me as a loan under my business to pay off the land.

  46. Colin Robertson April 2, 2015 at 11:57 am -


    That’s a tough one, not sure how the bank would view that. Hopefully they can help you out in some way if you are unable to make payments.

  47. Andrew April 12, 2015 at 4:21 pm -

    Looking to sell home, currently have high back end DTI , can we get pre approval if proceeds from sale of home be used to pay down debt as well as be used for down payment for new home?

  48. Kate April 30, 2015 at 12:41 pm -

    Hi – I am preapproved for a mortgage and am in the middle of a purchase. However, I am using my 401k loan for the down payment and the repayments will greatly reduce my net pay. I did not want to do a distribution because of tax ramifications and the fact that my fiance will be living in the house with me, so we have no problem paying the mortgage with combined net pay. And, I want my retirement account replenished as soon as possible. I have very liitle debt, high income, and great credit scores. My worry is the UW denying the mortgage b/c of the 401k replayments.
    I’ve heard that lenders cannot use your 401k loan payments in figuring your DTI. Is this true?

  49. Colin Robertson April 30, 2015 at 3:03 pm -


    It is true that loans secured by your own financial assets, such as a 401k loan, generally don’t count toward your monthly debt obligations. If you don’t want to take out a 401k loan, have you considered other options like having your fiance co-sign to avoiding tapping into your retirement?

  50. Kate May 1, 2015 at 8:57 am -

    Thanks Colin –
    Yes, we did, but he had some serious credit issues from a setback during the recession, so it would have really hurt us when applying for a loan. They would have used his scores versus mine & we were told it was better for me to apply on my own.
    It also kept us within a very manageable budget as he makes the same income as I do; the actual mortgage payment will be well within our household budget.
    I rechecked my disclosures last night and an existing loan on my 401K is not showing as a liability. My new loan was simply rolled into that with a short payoff (hence the large hit to my net pay), but the lender preappoved me with the original small loan payment clearly showing on my paystubs. I’m assuming if they didn’t count the original loan & repayments as a liability/debt, then they cannot count the increased amount as one.
    Thanks again for your reply!

  51. Katie B May 13, 2015 at 1:52 pm -


    Thank you for this helpful article. I’ve enjoyed reading the comments and your responses as well.

    Here’s my pickle. We currently own a home and need to upgrade. Given that we have a young baby and animals, we had always planned to buy and move into the new house before putting our current home on the market. Houses have been selling quickly in my neighborhood, but we plan to keep roughly 6 months of the current home mortgage in reserves, just in case it takes a while to sell.

    Having just started looking for financing for the potential new home, my husband is being told that holding the two mortgages puts our debt-to-income ratio too high. Obviously we don’t plan to keep two mortgages permanently, just until we can sell the old house.

    Do lenders have a way to account for this? I know we can’t be the only people who will have 2 mortgages for a few months. We thought that having the savings in reserve for paying mortgage #2 should suffice.

    Any thoughts?

  52. Colin Robertson May 18, 2015 at 3:11 pm -


    Reserves are one thing, income and DTI are another. Unfortunately, if there’s no guarantee you’ll actually sell your old house, it’s a potential risk to the new lender. They can’t just take your word for it. Things don’t always work out as planned.

    Check out Fannie Mae’s guidelines regarding a current principal residence pending sale:

  53. kelly May 29, 2015 at 7:32 pm -

    Bought a fixer triplex with partners. It turns out, they are horrible and we want to buy them out.

    The appraisal will be ok (the loan to value will be enough to pay them back). We have credit in the med-high 700s. My husband makes about 170K per year.

    But we took and maxed a line of credit to buy and remodel this investment property. Although the rental potential is huge (we are running it as a short term rental) and I anticipate about $150k a year in rent, this is very far from 2 years of income to help lower our dti.

    Will any banks consider this income (no leases as this is short term). How can we work around this?

  54. Colin Robertson June 3, 2015 at 4:53 pm -


    Most lenders want a lease and history of rental payments in order to count future rent. Seeing that you’re going after short-term renters that might be tricky. Could try portfolio lenders if conventional guys won’t approve you.

  55. Julie Zweber June 8, 2015 at 6:05 pm -

    I am trying to refi my home and consolidate two mortgages; I have a separate business that is handled from its own bank account and I file that income separately. Should that second/separate business be excluded from the calculations and consideration on refi due to how it’s filed with IRS and paid through business account?

  56. Colin Robertson June 10, 2015 at 3:17 pm -


    The business gain/loss should affect your other income and thus your DTI. You can’t really exclude things that could make you a higher risk to lend to.

  57. Meg June 12, 2015 at 2:29 pm -

    Can improving your credit score increase the DTI allowed for a VA loan?

  58. Colin Robertson June 12, 2015 at 4:39 pm -


    Yes, it’s possible that a good credit score can be a compensating factor if your DTI is high.

  59. Meg June 15, 2015 at 6:58 am -

    They are trying to raise my husband’s mid score by doing a rapid re score to compensate for our current DTI of 54%. Our DTI is only high because he is self employed and we are not able to use all of his income the way he filed his returns. His current mid score is only a 639. At what score would we see a higher allowed DTI? We paid all debts off except a car loan a small business loan and one small credit card. Hoping this raises it enough.

  60. Colin Robertson June 18, 2015 at 10:02 am -


    Typically you need really good credit for it to be used as a compensating factor. But the reduction of debt you guys paid off to boost his score may also push down the DTI.

  61. Drew June 30, 2015 at 10:00 am -


    We are looking to move into a new construction home around $430K. We are going to sell our current home and with the equity can cover a 5% ($22,000) down payment. I have used a mortgage calculator and factored roughly what our new mortgage payment would be a month. I plugged that number in and our DTI comes in at 43%. My fiancée and I will both be applying and we have great credit scores 750+. Do you think we have a decent chance at being approved for this loan?


  62. Lorin August 7, 2015 at 10:35 pm -


    I currently receive $1750/mo. Social Security Disability, which is non-taxable income. Do all lenders “gross up” your SSDI monthly income by 25% to reflect the non-taxable status? If so, would the income used in the DTI calculation be $2,194 mo?

    Also, if it’s not a case of a permanent disability, and eventually I might be able to work again, how does that affect your qualification for a loan?


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