DTI is your total monthly debt payments divided by your gross monthly income. For example, if your monthly debts (including the new mortgage payment) total $2,500 and your gross income is $5,000, your DTI is 50%. Lenders look at two DTI numbers: front-end (housing costs only) and back-end (all debts including housing).

Conventional loans typically require a DTI of 43-50%. FHA loans allow up to 57% with compensating factors. VA loans do not have a strict maximum but generally prefer 41% or below. Non-QM lenders may have their own criteria. The maximum depends on your loan type, credit score, and compensating factors.

Pay off small installment loans entirely to eliminate those monthly payments. Reduce credit card balances to lower minimum payments. Switch to income-driven repayment for student loans to reduce the monthly amount. Increase your income through a second job or overtime. NMHL loan officers can identify the most efficient strategy for your situation.

Yes, the treatment depends on the loan program. FHA uses 1% of the student loan balance or the actual payment if on an income-driven plan. Conventional loans use the greater of 1% of the balance or the actual payment. If you are on an income-driven repayment plan showing $0, some programs will use 0.5% of the balance instead. NMHL can optimize your student loan strategy for mortgage qualification.