Finance
What is 'debt-to-income ratio' (DTI) and how does it affect mortgage qualification in Delaware?
AThe ratio of the property's debt to its income; used only for investment properties
BThe borrower's total monthly debt payments divided by gross monthly income; lenders use DTI to assess ability to repay — conventional loans typically require DTI below 43–45%✓ Correct
CThe ratio of the down payment to total purchase price
DA ratio calculated only after closing to monitor loan performance
Explanation
Debt-to-income (DTI) ratio is the borrower's total monthly debt payments (including the proposed mortgage) divided by gross monthly income. Lenders use DTI to measure repayment capacity. Conventional loans generally require DTI at or below 43–45%; FHA may allow up to 57% with compensating factors.
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