In a debt-to-income (DTI) analysis, the borrower's total monthly housing-related payments (including principal, interest, taxes, insurance, and any homeowner association fees) are assessed as a percentage of their gross monthly income. Lenders use the gross income, which is the borrower's income before taxes and deductions, to determine affordability and creditworthiness.
* Net monthly income (A) and taxable income (C) are not used in standard DTI calculations.
* The loan amount (D) is unrelated to the DTI calculation.
References:
* Fannie Mae and Freddie Mac Guidelines on DTI ratios
* CFPB Guidelines on Ability-to-Repay and DTI