Clearing a DTI (Debt-to-Income) Underwriting Condition
A DTI ratio condition means total monthly obligations exceed the lender's maximum. Common resolutions include paying off debts, adding co-borrower income,
What Is This Condition?
- DTI (back-end) is the ratio of all monthly obligations to gross monthly income. FNMA maximum is 45–50% depending on compensating factors.
DTI (back-end) is the ratio of all monthly obligations to gross monthly income. FNMA maximum is 45–50% depending on compensating factors.
How to Clear This Condition
- 01Identify debts driving high DTI
- 02Model payoff scenarios
- 03Check installment debts with under 10 months remaining
- 04Resubmit to AUS
Documents Required to Clear This Condition
- Pay off credit cards or installment loans
- Exclude debts with fewer than 10 months remaining
- Add co-borrower income
- Reduce purchase price or loan amount
- Document additional income sources
How CTC Handles This Condition
CTC addresses DTI issues at intake, before underwriting. We run DU/LP scenarios modeling debt payoffs and income documentation before submission. A high DTI found at underwriting is a red flag CTC prevents.
Frequently Asked Questions
What is the maximum DTI for conventional loans?
FNMA maximum is generally 45%, with some AUS approvals to 50% with strong compensating factors (high down payment, strong reserves, high credit score). FHA maximum is 57% with AUS approval.
Can I exclude installment debts from my DTI?
Installment debts with 10 months or fewer remaining can typically be excluded under FNMA/FHLMC guidelines. CTC reviews remaining terms on all installment debts at submission.
What compensating factors help with high DTI?
Strong reserves (12+ months PITIA), high credit score (720+), larger down payment (20%+), and history of carrying similar payment levels all help AUS approve higher-DTI files.