secondarymortgage.comDebt-to-Income Floor
DTI floors shift based on credit score, loan-to-value ratio, and amortization type—know where your floor actually lies.
Lenders using agency routes face tighter DTI ceilings—typically 45% for Fannie Mae and Freddie Mac—but those ceilings rise or fall depending on residual credit strength. A borrower with higher credit may qualify at a higher DTI, while one with lower credit may be capped at a lower DTI under the same LTV and loan term. Always cross-check DTI against the full credit profile, not just the number.
LTV interacts directly with DTI tolerance. A 90% LTV loan may require DTI below 43%, but dropping to 75% LTV could lift the ceiling to 45% or higher. The risk layering principle applies: higher LTV combined with lower FICO narrows acceptable DTI faster than either factor alone. This is why bundling high-LTV, lower-score loans without compensating equity often fails review.
Amortization type matters more than many assume. A 30-year fixed loan generally allows higher DTI than a 15-year fixed at same LTV and FICO because monthly payments are lower, improving debt service coverage. Adjusting from 30-year to 15-year without re-underwriting is a common cause of unintended ineligibility. Evaluate amortization impact early in loan structuring, especially for borrowers near DTI thresholds.
