DTI
Debt-to-Income Ratio
What is DTI?
Borrower’s monthly debt obligations divided by gross monthly income. The core ability-to-repay metric on owner-occupied lending.
DTI stands for Debt-to-Income ratio. It expresses a borrower’s total monthly debt obligations as a percentage of gross monthly income. The denominator is pre-tax income; the numerator is the sum of every reported monthly debt — the proposed housing payment, other mortgages, auto loans, student loan minimums, credit card minimums, and any court-ordered alimony or child support.
On most Qualified Mortgage products, DTI is capped at 43%. On non-QM Prime Time, the cap is 50% — with a stretch to 55% if the borrower has $3,500 in monthly residual income on a primary residence at LTV of 80% or lower. Documentation of income depends on the doc path (full doc, bank statement, 1099, asset utilization, P&L only, written VOE).
On DSCR loans, DTI is not calculated — the property’s rental income qualifies the loan, not the borrower’s personal income. This is why DSCR programs are popular with self-employed investors whose tax returns understate their true earning power.
How DTI applies at Total Quality Lending
DTI is calculated only on Prime Time (TQL’s owner-occupied and second-home program). The max is 50%, stretching to 55% with $3,500 monthly residual on primary at ≤80% LTV. DTI is NOT calculated on DSCR, Multi-Unit DSCR, or Foreign National DSCR loans — those programs qualify on property income.