Debt-to-income ratio (DTI)
Your monthly debt payments, including the new housing payment, divided by your gross monthly income. Lenders use it to judge whether you can carry the loan; each loan program sets its own limits.
Also called: DTI, debt to income, back-end ratio, front-end ratio
Related terms
Short for principal, interest, taxes and insurance, the four parts of a typical monthly mortgage payment. Lenders use PITI, plus any HOA dues or mortgage insurance, to judge whether you can afford the loan.
The lender's review of your income, assets, credit and the property to decide whether to approve the loan. The underwriter often asks for more documents before issuing final approval.
A lender's written statement that you qualify for a loan up to a certain amount after reviewing your credit, income and assets. Sellers usually expect one with an offer. Final approval still depends on the property and underwriting.
A number, usually from 300 to 850, that summarizes how you have handled debt. Lenders use it to decide whether to approve a loan and what rate and mortgage insurance cost to charge.
A mortgage not insured or guaranteed by a government agency such as FHA, VA or USDA. Most follow Fannie Mae and Freddie Mac rules and require private mortgage insurance when the down payment is under 20%.