Finance
What is 'debt-to-income ratio' (DTI) and why is it particularly challenging for Hawaii buyers?
AA. The ratio of the loan amount to the property value
BB. The percentage of gross monthly income consumed by monthly debt payments; challenging in Hawaii because high property costs produce high PITI payments relative to income✓ Correct
CC. The ratio of interest expense to net operating income
DD. A Hawaii-specific calculation comparing debt to local median income
Explanation
DTI = Total Monthly Debt / Gross Monthly Income × 100%. Conventional loans typically require total DTI below 43-45% (with exceptions to 50%). Hawaii's high property values mean mortgage payments often consume a larger portion of income than in other states. Many Hawaii buyers struggle to meet DTI requirements unless they have high incomes or large down payments.
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