DTI (Debt-to-Income)

DTI: Debt-to-Income ratio

Your DTI (Debt-to-Income) tells you how much of each month's income already goes to paying debt: DTI = total monthly debt / gross monthly income · 100%. US lenders look at two versions of it. The front-end DTI counts housing only (mortgage + taxes + insurance) and they like to see it under 28%. The back-end DTI rolls in every recurring debt (cards, auto, student loans) and the usual line is 36%. Put US$ 1,800 of monthly debt against US$ 6,000 of income and you land at a 30% DTI. Once you cross 43%, most qualified mortgages are off the table.

Brazilian context

In Brazil, banks tend to hold the mortgage installment to 30% of net monthly income. Once DTI passes 40%, you are in over-indebtedness territory as defined by Lei 14.181/2021 (Lei do Superendividamento), the law that opens the door to renegotiating debt through Procon and the judicial mutirões. Credit bureaus such as Serasa and SPC lean heavily on DTI when they build a credit score.

FAQ

Gross or net income? US lenders work off gross, before tax. Brazilian banks usually go by net, what actually hits your account. Check which one you're being measured against before you do the math.

What counts as debt? Anything you owe on a recurring schedule: mortgage or rent, the credit-card minimum, auto loans, student loans, alimony. Your power bill and the weekly grocery run don't.

How can I lower my DTI? Knock down the high-interest balances first, stretch loans over longer terms, or grow your income. A small drop can be enough to move you into a better rate bracket.