#debt-to-income-ratio

#debt-to-income-ratio

Lenders use debt-to-income ratio to determine how much a potential borrower can afford to pay on a mortgage. This ratio includes most sources of debt and income, but it doesn't include everyday expenses like utilities or groceries. Generally, having a higher debt-to-income ratio makes it harder to secure financing to buy a house.

Understanding your debt-to-income ratio is crucial since it directly impacts your chances of qualifying for a mortgage. Higher DTI means more reluctance from lenders.