Mortgage lenders don't just look at your credit score or how much cash you have saved for a down payment.
They run one number that quietly decides whether you get approved or denied: your debt-to-income ratio.
And with home prices still high and mortgage rates hovering near 6% to 7%, that single figure is tripping up more buyers than almost anything else.
Your debt-to-income ratio, or DTI, is the percentage of your gross monthly income that goes toward debt payments.
Add up your expected mortgage payment, property taxes, homeowner's insurance, plus any car loans, student loans, minimum credit card payments, and personal loans.
Divide that total by what you earn each month before taxes.
Most conventional lenders want that number at or below 43%.
Some government-backed loans, like FHA mortgages, allow ratios up to around 50% with compensating factors.
Go above the limit, and you can be denied even with an 800 credit score and a hefty down payment sitting in the bank.
Say you earn $6,000 a month before taxes.
At a 43% cap, your total debt payments can't exceed about $2,580.
If you already pay $450 on a car loan and $200 in minimum card payments, that leaves roughly $1,930 for housing.
At today's rates, that supports a home in the $240,000 to $260,000 range in many markets — often less than buyers expect once taxes and insurance are factored in.
First, lenders count the minimum payment on every card, even ones with a zero balance showing activity.
Second, they use gross income, not take-home pay, so the number on your offer letter looks bigger than what actually lands in your checking account.
A couple earning $90,000 combined may feel like they can handle a $2,400 payment, but after taxes, retirement contributions, and everyday bills, the real squeeze shows up.
If your DTI is too high, you have levers.
Paying down revolving card balances helps the most, because it lowers minimum payments immediately.
Avoid financing a new car before house hunting — that move alone has killed countless approvals.
Some buyers add a co-borrower to boost household income, or shop in a lower price bracket and refinance later if rates drop.
The takeaway is simple: before you tour a single open house, run your own DTI with a calculator and a recent pay stub.
Knowing your real ceiling keeps you from falling in love with a house the bank will never let you buy.
Our take: the 43% rule feels restrictive, but it exists because stretched buyers are the first to struggle when repairs, taxes, or rates move against them.
Final Thoughts
Knowing your number before a lender does puts you in control of the search instead of reacting to a rejection.