> ## Documentation Index
> Fetch the complete documentation index at: https://cameron.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# Debt-to-Income Ratio

> How DTI is calculated for self-employed mortgage programs and what limits apply

Debt-to-income ratio (DTI) measures your monthly debt payments against your monthly income. It's a key factor in determining how much you can borrow with a self-employed mortgage program.

## How DTI Is Calculated

**DTI = Total Monthly Debt Payments ÷ Gross Monthly Income**

For self-employed mortgage programs, your qualifying income comes from whichever documentation method you're using—bank statement deposits, 1099 totals, CPA-prepared P\&L net profit, or asset depletion calculation—rather than tax returns or pay stubs.

**Example:** Your bank statements produce \$15,000/month qualifying income. Your monthly debts total \$6,000.

\$6,000 ÷ \$15,000 = 40% DTI

## What Counts as Debt

Lenders include these monthly obligations:

* Proposed mortgage payment (principal, interest, taxes, insurance, homeowners association dues)
* Car loans and leases
* Student loans
* Credit card minimum payments
* Personal loans
* Other mortgages or HELOCs
* Alimony or child support payments

They don't typically count utilities, cell phone bills, insurance premiums (other than homeowners), or subscriptions.

## DTI Limits for Self-Employed Mortgage Programs

| DTI Range | Availability                                    |
| --------- | ----------------------------------------------- |
| Up to 43% | Most lenders, best terms                        |
| 43-50%    | Many lenders with compensating factors          |
| 50-55%    | Limited lenders, requires strong file           |
| Above 55% | Rare, requires significant compensating factors |

Maximum DTI varies by lender, credit score, LTV, and loan amount. A borrower with 750 credit and 30% down may qualify at 50% DTI, while someone with 660 credit and 10% down might be capped at 43%.

## Compensating Factors

Lenders may allow higher DTI if you have:

* Higher credit score (720+)
* Lower LTV / larger down payment
* Significant cash reserves (12+ months)
* Strong income trending upward
* History of managing similar payment amounts

## Lowering Your DTI

To improve your DTI before applying:

* Pay off smaller debts (car loans, credit cards)
* Avoid taking on new debt
* Increase qualifying income by choosing the optimal documentation method or statement period
* Consider a less expensive property

A few percentage points of DTI can mean the difference between approval and denial, or unlock better loan terms.