DTI (Debt-to-Income ratio) is a key metric lenders use to evaluate borrowers. Most lenders want your front-end DTI (housing costs) below 28% and total DTI below 36–43%.
Example: $2,000/mo in debt payments ÷ $6,000/mo gross income = 33% DTI. A high DTI limits your ability to get new credit and signals financial strain. Reducing DTI by paying off debt improves your financial health and borrowing power.