That preapproval letter you were counting on may be worth less than you think.
Across the mortgage industry, lenders have been quietly nudging their debt-to-income cutoffs tighter, and a lot of buyers are finding out at the worst possible moment — after they've paid for an inspection.
Here's the number doing the damage: your debt-to-income ratio, or DTI.
It's all your monthly debt payments divided by your gross monthly income.
A $600 car payment, $300 in minimum credit card payments, and a $400 student loan bill eat $1,300 of your income before the mortgage even shows up on the page.
That figure came from the Qualified Mortgage standards that shaped lending for a decade.
Many lenders still advertise it, which is exactly why the gap between what borrowers expect and what they get has gotten so wide.
Fannie Mae's own selling guide allows DTI up to 50% in some cases, but only when compensating factors kick in — reserves in the bank, a long history of paying similar housing costs, or a strong credit score.
In practice, loan officers say files above 45% are getting scrubbed harder than they were two years ago, and borderline files are sitting in underwriting longer.
Home prices are still elevated in most metros, insurance premiums have jumped in states like Florida and Texas, and property tax assessments caught up with the pandemic-era price surge.
Lenders are looking at the same payment shock borrowers are.
What trips people up most is what counts as debt.
Child support, co-signed loans for a relative's car, and even some buy-now-pay-later balances are increasingly showing up in underwriting pulls.
One co-signature you forgot about can push a comfortable file into decline territory.
There's also a quieter trap: paying off a card to lower your DTI right before applying.
If you close the account, you lose available credit and your credit score can dip.
If you pay it down but the statement hasn't cycled, the underwriter may still see the old balance.
Rental payment history now counts in some automated underwriting systems, but only if your landlord reports it and only if the payments are verifiable.
Cash paid to a private landlord often vanishes from the file entirely.
Putting more down shrinks the loan and the payment.
Buying points lowers the rate but costs cash upfront.
Extending the term to 30 years from 15 drops the monthly number but adds tens of thousands in interest over the life of the loan.
The uncomfortable part is who benefits from the confusion.
Lenders, brokers, and lead-generation sites all profit from getting you into the pipeline before you know your real number.
A soft preapproval costs them almost nothing and keeps you shopping.
A hard denial costs you time you can't get back.
Add up every minimum payment, not the amounts you actually pay.
Divide by your gross monthly pay, before taxes and 401(k).
If you land near 45%, assume you'll need reserves or a bigger down payment to get through.
Our take: the 43% figure floating around the internet is a marketing number, not a promise.
Know your real ratio before you fall in love with a house, and get a second lender's opinion in writing.
Final Thoughts
The couple hours of paperwork is cheaper than losing an earnest money deposit.