Understanding FHA DTI: How It Impacts Mortgage Approval
When buying a home, many potential buyers focus on credit scores and down payments. However, one of the most critical factors in mortgage approval is the FHA DTI (Debt-to-Income Ratio). This key metric determines how much debt an applicant has in comparison to their income, influencing their eligibility for an FHA loan. Understanding FHA DTI ratio can help buyers prepare financially and increase their chances of securing a mortgage. What is FHA DTI? FHA DTI , or FHA debt to income ratio , is a calculation lenders use to measure an applicant’s financial stability. It is expressed as a percentage and compares a borrower’s monthly debt obligations to their gross monthly income. This ratio plays a significant role in determining whether a person qualifies for an FHA home loan DTI and how much they can borrow. There are two types of mortgage loan debt to income ratios: Front-End DTI – This measures how much of a borrower’s in...