Finance
What is 'debt-to-income ratio' (DTI) and how do lenders use it in Nevada?
ADTI measures a property's income relative to its debt obligations
BDTI = Total Monthly Debt Payments ÷ Gross Monthly Income; lenders use it to evaluate a borrower's ability to manage monthly payments — conventional loans typically require a DTI below 43-45%✓ Correct
CDTI is a Nevada-specific calculation used only for commercial loans
DDTI = Annual Income ÷ Total Mortgage Debt
Explanation
DTI is a key underwriting metric. Front-end DTI (housing ratio) includes only housing costs (PITI); back-end DTI (total DTI) includes all monthly debt payments. Conventional loans generally allow up to 43-45% back-end DTI; FHA allows up to 50% with compensating factors. In Nevada's high-cost Las Vegas market, DTI can be a barrier for buyers with significant car payments or student loan debt.
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