DTI ratio if you have no other debt?

[Ellie Narie]

Please explain DTI ratios to me. For example, USDA has a 29/41 DTI ratio. They say that your housing payment should be no more than 29% of your income and your total debt should be no more than 41% of your income. But what if you have NO other debt? Would they allow you the bigger loan so that your mortgage payment is 41% of your income? Would they allow your mortgage payment to be your "total allowed debt" if you have no other debt?

[Ellie Narie]

Originally posted by @Walter Key:

Those DTI ratios BOTH have to be met. So, if you have ZERO debt, they will approve you for whichever ratio is less. Example, if you have a $5,000 income, 29% house max is $1450/MO. Now, 41% TOTAL DTI would be $2050/MO. They'll approve you for a mortgage with a payment of no more than $1450/MO.

Let's say you had a car payment, credit cards, etc that equaled $1,500/MO. Your $1450/MO housing DTI PLUS the $1,500/MO in consumer debt would put your Total DTI well over 41% ($1,450+$1,500=$2,950 or 59% total DTI), so they would reduce the amount of mortgage approved to keep you under that 41% total DTI. Make sense?

 Makes sense, thank you.