Finance
What is 'debt-to-income ratio' (DTI) and why is it important in Delaware mortgage qualification?
AThe ratio of home value to outstanding debt; higher is better for qualification
BThe ratio of monthly debt obligations to gross monthly income; used to assess ability to manage loan payments✓ Correct
CThe ratio of real estate debt to other investments; used in commercial underwriting
DThe ratio of total assets to total liabilities; used in estate planning
Explanation
DTI = Total Monthly Debt Payments ÷ Gross Monthly Income. Lenders use DTI to assess the borrower's ability to service debt. Most conventional loans require a DTI of 45% or less (sometimes up to 50% with compensating factors).
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