Mortgage lenders are getting pickier, and the number doing the gatekeeping is your debt-to-income ratio.
If you're house hunting right now, that single figure can matter more than your credit score in some cases.
Your DTI is all your monthly debt payments divided by your gross monthly income.
That includes car loans, student loans, minimum credit card payments, and the new mortgage you're applying for.
If you make $7,000 a month and owe $2,100 across everything, your DTI is 30%.
For years, many conventional loans sailed through at 43% or even 45% with the right compensating factors, like a fat savings account.
Lenders have been slowly pulling back on those exceptions as inventories tighten.
Because mortgage defaults ticked up from historic lows, and lenders hate being the last one holding the bag.
Add in higher rates keeping payments bloated, and a household that looked fine at a 3% mortgage looks stretched at 7%.
A borrower with a $400 car payment and $150 in student loans can lose tens of thousands in buying power when the DTI ceiling drops from 45% to 43%.
That's a different house, or renting another year.
The frustrating part is the rules aren't uniform.
Fannie Mae and Freddie Mac guidelines say one thing.
FHA loans allow higher DTIs with compensating factors.
Credit unions and portfolio lenders write their own rules.
So the same buyer can get a yes from one lender and a no from another.
There's also a quiet trap buried in the fine print.
Lenders count minimum payments on credit cards, not what you actually pay.
If you charge $8,000 and pay $1,200 monthly, many systems still use the smaller minimum in the calculation.
Paying down balances before applying can move your DTI more than you'd expect.
That student loan you co-signed for a nephew?
It's on your DTI even if he's never missed a payment.
Pay down revolving debt first, since it moves the ratio fastest.
Avoid financing a car in the six months before applying.
Don't close old credit cards, because that can shrink your available credit and change how underwriters see you.
And get pre-approved with at least two lenders, since their math genuinely differs.
One more thing worth naming: the folks benefiting from tighter DTI rules are the lenders and investors holding the risk, not you.
Stricter underwriting protects them from defaults.
It also prices out marginal buyers, which is worth remembering when someone tells you the rules exist purely to protect you.
If you're shopping this spring, run your own numbers before a lender does.
Take your total monthly debt payments, divide by gross income, and see where you land.
If you're above 36%, you're in the zone where your file needs to be otherwise spotless.
Our take: DTI limits are a reasonable guardrail, but the patchwork of rules means the system rewards borrowers who shop around and punishes those who take the first answer.
Final Thoughts
Know your number before someone else uses it against you.