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What Is a Good DTI for a Mortgage?

By U.S. News & World Report

If you plan to buy a home or car — or make any purchase that requires a loan — it is essential to have a good debt-to-income ratio. Your DTI reveals how much of your income goes toward debt payments each month, and this ratio gives lenders a snapshot of your financial condition and how likely you are to pay back your loan.

A good DTI may help get you a loan at the best rates, but a bad DTI might prohibit you from getting a loan at all.

“Getting over-leveraged and having too much debt compared to your income can be like a house of cards: One little gust of wind can send the whole thing toppling down,” says Evan Henderson, a certified financial planner with Northright Financial in Appleton, Wisconsin.

Before you shop for a home loan, make sure you understand how debt-to-income ratio works and how you can improve your DTI.

What Is Debt-to-Income Ratio?

Calculating a debt-to-income ratio is as simple as taking all of your outstanding monthly debts and dividing them by your monthly income. Typically, gross monthly income is used, which is what you earn before taxes and deductions.

This gives lenders important insights into your ability to pay back a loan, and the lower your DTI, the better. “It means you have more money to pay off debts, which makes it less likely for you to miss payments,” says Anna Sergunina, a certified financial planner and president and CEO at MainStreet Financial Planning in Los Gatos, California.

A lender will use your DTI to determine whether to approve a loan, how much you can borrow and at what interest rate. A low DTI “makes lenders see you as reliable, so they offer you loans with lower interest rates and better conditions,” Sergunina says.

[Read: Best Mortgage Lenders]

Front- vs. Back-End DTI Ratios

When you borrow, lenders scrutinize two aspects of your DTI — the front-end ratio and the back-end ratio.

The front-end ratio includes your housing expenses and consists of your principal, interest, taxes and insurance. According to the Federal Deposit Insurance Corp., lenders typically want the front-end ratio to be no more than 25% to 28% of your monthly gross income. The back-end ratio includes housing expenses plus long-term debt. Lenders prefer to see this number at 33% to 36% of your monthly gross income.

[Read: Best Mortgage Refinance Lenders.]

What Is a Good DTI Ratio for a Mortgage?

Debt-to-income ratio requirements vary, but as a general rule, lenders want to feel comfortable that your current debt load is low enough that you’ll be able to repay a debt as large as a home loan. “A strong debt-to-income ratio would be less than 28% of your monthly income on housing and no more than an additional 8% on other debts,” Henderson says.

However, other lenders may be willing to approve a mortgage even if your DTI is higher.

DTI Requirements by Mortgage Type

Different mortgages have their own DTI requirements, although precise requirements vary by lender. According to Experian, most lenders want to see a DTI below 43% to qualify for a conventional mortgage — and some may require a DTI of 36% or lower.

However, other positive factors — such as a strong credit score or significant cash assets — might help secure a conventional mortgage even if your DTI is as high as 50%.

Borrowers looking to qualify for a non-conventional mortgage — such as those backed by the Federal Housing Administration or the Department of Veterans Affairs — will face different standards. To qualify for an FHA loan, you need a front-end ratio no higher than 31% and a back-end ratio of 43% or less, Experian says. An acceptable DTI ratio for a VA loan is 41%.

How to Calculate Debt-to-Income Ratio

Calculating a debt-to-income ratio is a relatively straightforward process. To find your DTI:

— Calculate all of your monthly debts, including a mortgage, auto loan, credit card bill and other obligations.

— Calculate your monthly gross income — the amount before taxes and deductions.

— Divide your monthly debts by your monthly income to produce your DTI.

For example, if your monthly debts total $3,000 and your gross monthly income is $7,500, your DTI is 40%. In essence, 40 cents of every dollar you make goes toward paying off debt, which is considered high. The Consumer Financial Protection Bureau recommends that homeowners keep their DTI at 36% or below, and that renters keep their DTI to 15% to 20% or less.

How Can I Improve My Debt-to-Income Ratio?

The good news is that improving your debt-to-income ratio is possible — and almost entirely under your control. But it might take time. “Two obvious steps to (improving) your debt-to-income ratio would be either increasing your income or decreasing your debts,” Henderson says.

Paying off your debt is the best way to lower your DTI. After all, the less debt you have, the greater the gap between your debts and your income. “Focus on reducing your outstanding debts, starting with high-interest obligations like credit card debt,” Sergunina says.

Regularly making payments above the minimum can accelerate your debt reduction, she adds. Then, try to avoid opening new lines of credit.

Boosting your income can also lower your DTI. A raise at your current job, a new job with a higher salary, or even a part-time job or side hustle can increase the money coming into your household.

Why DTI Is Important

Lenders want to be confident that their money will be repaid, and DTI shows how much of your income goes toward paying down debt and how likely it is that you will pay back your obligation. Borrowers with lower DTIs are more likely to be approved for a loan. They may also be able to access larger loans and borrow money at the lowest interest rates.

More from U.S. News

What Is an Interest-Only Mortgage?

Can You Get a Mortgage If You’re Self-Employed?

What Happens if You Miss a Mortgage Payment?

What Is a Good DTI for a Mortgage? originally appeared on usnews.com

Update 01/14/26: This story was previously published at an earlier date and has been updated with new information.

Deputy followed her six miles, then threw her to the ground: Sun Prairie family alleges racial profiling, excessive force

By CNN
Click here for updates on this story    SUN PRAIRIE, WI (365 Media Foundation, Inc) -- A Sun Prairie family has filed complaints with the Dane County Sheriff’s Office (DCSO) and Sun Prairie Police Department (SPPD), and is pursuing legal action, after a Dane County Sheriff’s Deputy followed a 19-year-old woman for more than six miles, handcuffed her father, forcibly threw her to the ground and violently detained her without provocation.Sun Prairie Police body camera video shows Bryanna Montgomery, 19, was backing away from Deputy Tory Boyce when he grabbed her arm and the back of her neck, throwing her to the ground and kneeling on her back. With the assistance of Sun Prairie Police officer Tyler Chitwood, who also knelt on Bryanna Montgomery’s back, Boyce placed Montgomery in the back of his patrol car.“I’m about to watch my kid get killed in front of our (expletive) house,” Jovan Montgomery recalls thinking. He said he may pursue therapy, as the whole encounter has given him recurring nightmares.A Sun Prairie Police Department spokesman said the department is looking into the case but could not comment at this time. “The Dane County Sheriff’s Office takes all complaints about the conduct of our employees seriously. Maintaining the trust and confidence of our community members is of the utmost importance,” Dane County Sheriff Kalvin Barret said in an email to Madison365. “Whenever we receive a complaint, we thoroughly review the matter and take appropriate action based on the outcome of the investigation.”The following video comes from two SPPD body cameras. The second depicts a better view of Boyce’s actions but is muted, which is against SPPD policy. The video contains profanity and disturbing images.youtu.be/Q1m7lt0gYOs?si=mZGLeF-gYyLHu0EwAll eight body camera videos are available at this link: youtu.be/AwpbkPlcdkEThe incidentJovan Montgomery told Madison365 that he and his daughter Bryanna had gone to Madison’s east side to pick up his other daughter’s car late Wednesday, July 29. Bryanna was driving that car back to their home in Sun Prairie, with Jovan in his car behind. He said he noticed a Dane County Sheriff’s Deputy following closely behind Bryanna on the East Side of Madison, and that the deputy continued to follow her all the way to Sun Prairie. A ticket mailed to Bryanna subsequently alleges that she ran the stop sign at Portage Road and Hanson Road in the Town of Burke. Google Maps indicates that it’s a 6.6-mile drive from there to the Montgomery home, which is where Boyce finally turned on his lights and pulled Bryanna over.A DCSO representative said there’s no set policy on how long it should take to initiate a traffic stop after a deputy observes a violation.“The timeline completely depends on the discretion of the individual law enforcement officer surrounding the anticipated contact,” DCSO Public Information Officer Elise Shaffer wrote in an email responding to Madison365’s questions. “Every contact with the public presents its own unique set of circumstances.”Madison365 has submitted open records requests for Boyce’s patrol car dash cam video. The dark blue route is the one Jovan Montgomery said he and his daughter took from the East Side of Madison to Sun Prairie, with Sheriff’s Deputy Tory Boyce following the entire way. Jovan Montgomery said he followed the deputy as the deputy followed Byranna, calling his wife, who was at home. When they arrived home and the deputy turned his lights on, Jovan parked behind the deputy’s car. Jovan got out of his car just as Boyce was getting out of his, and Jovan said Boyce immediately shone his flashlight into Jovan’s eyes and demanded to see his ID. Jovan Montgomery said he asked what crime he had committed, and declined to show his ID. A law enforcement officer can ask anyone for an ID, and a person can decline that request, unless the officer has reasonable suspicion that they’ve committed a crime, Shaffer said. “He probably wanted to see if I got a warrant (for arrest),” Jovan Montgomery said. “I don’t. Once he saw me, he saw a Black man, and he’s like, ‘target acquired.'”After declining to provide an ID, Jovan Montgomery walked onto his front lawn and requested Boyce summon assistance from the Sun Prairie Police Department (SPPD), because he knew SPPD uses body cameras. Eight SPPD officers arrived very shortly thereafter.SPPD body camera video indicates that Boyce told SPPD officers “he’s detained, she’s detained,” pointing in turn at Jovan and Bryanna Montgomery. Jovan Montgomery’s wife and Bryanna’s stepmother, Emily Wendt, was also outside and vocally confrontational with police, but was not detained.Wendt is white. Jovan and Bryanna Montgomery are Black.SPPD officer Tyler Chitwood wrote in an incident report that he asked Boyce if he wanted Jovan Montgomery in handcuffs, and that Boyce said yes.Chitwood’s body camera video shows that he asked, “You want him actually detained?” And Boyce answered, “Yes, with the way he’s acting,” as Jovan Montgomery, standing on his front lawn, took a step back with his arms folded.Chitwood and officer Odalys Gloria then placed Jovan Montgomery in handcuffs. Chitwood wrote in his report that Jovan Montgomery offered “passive resistance” by tensing his arm, but complied.Shaffer said Wisconsin law enforcement officers “are allowed to handcuff a person when that person is under formal arrest, placed in protective custody, or when a law enforcement officer has specific articulable facts showing the person poses a safety or flight risk during temporary detention.”Madison365 has submitted open records requests for Deputy Boyce’s incident reports to ascertain whether he articulated any such facts. Shaffer could not answer whether his reports contain such facts.Video recorded by Chitwood and Gloria then shows Boyce speaking with Bryanna Montgomery on the sidewalk. Boyce said he wanted to “explain the traffic stop” and seemed to indicate he wanted Bryanna Montgomery to move closer to the street for that purpose. It’s unclear why he couldn’t explain the traffic stop where they were standing, on the sidewalk. Bryanna Montgomery did not seem threatening, nor did she seem to be attempting to flee. However, when she refused to walk with Boyce toward the street, he grabbed her upper arm with one hand, the back of her neck with the other and threw her face-first to the ground, on the strip of grass between the sidewalk and the curb. While Wendt screamed and implored officers to get off of her, and Jovan told Bryanna to hold still and calm down, both Chitwood and Boyce knelt on her back while securing her in handcuffs. She said once that she couldn’t breathe. Once they had her cuffed, Chitwood asked whether she needed an ambulance; she said no. They then walked her to a patrol car and she voluntarily got in the back seat, saying, “I weigh like 20 times less than both of you. You don’t need two grown men on my (expletive) back.”A few minutes later, a DCSO Sergeant arrived and walked Jovan toward his garage door, away from the SPPD officers. Jovan said he explained the situation to the sergeant and the sergeant unlocked the handcuffs on him and instructed SPPD officers to get Bryanna out of the squad car and unlock the handcuffs on her. Boyce told Bryanna that he would mail a ticket, and the police all left.Bryanna Montgomery then received tickets in the mail for failure to obey a traffic sign, for following too closely and for driving without her driver’s license on her person. Jovan Montgomery received a ticket for following Boyce too closely. That ticket indicates the violation happened on Main Street in Sun Prairie, even though all three vehicles avoided Main Street due to road construction.“This was a big deal”After the police had all left, Wendt and Jovan Montgomery took Bryanna to the emergency room, where she was treated for a racing heart rate, difficulty breathing, and abrasions to her legs. A little over a week later, during an interview with Madison365, Jovan seemed more traumatized than Bryanna was.“You’re supposed to de-escalate,” he said of his expectations of police. “You’re supposed to make sure people feel safe. I don’t even feel safe in front of police anymore.”He said he remembers hearing Bryanna say, “We’re not doing this today” to Boyce, and thinking she meant, “we’re not doing what you guys just did a week ago with Corey (Ruiz),” referring to the man shot and killed by Madison police on July 22, just a week before this encounter. “That’s not gonna happen. You’re not gonna do any violence or murder somebody in front of our house. I’m no threat.”Bryanna said she felt more disrespected than fearful.“You’re not even talking to me like I’m a human,” Bryanna said. “You’re talking to me like you own me.”“It just seemed like it was just a really bad day, and it seemed like the deputy wanted to make it a worse day,” Jovan Montgomery said. “I really feel that I was being targeted… as a Black man.”The family has filed complaints with both DCSO and SPPD. They have also consulted an attorney and are considering a lawsuit against both agencies.“I want a public apology towards me and for my child, because a routine traffic stop should not turn into where people are being thrown around like rag dolls or like we’re slaves,” Jovan said. “Those days are over with.”Wendt said she wants “some accountability that something’s going to change. There’s going to have to be some monetary compensation, too. This is trauma… what we want is acknowledgement. We want Byranna’s case to mean something for change. This was a big deal.”Please note: This story was provided to CNN Wire by an affiliate and does not contain original CNN reporting. This content carries a strict local market embargo. If you share the same market as the contributor of this article, you may not use it on any platform.
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