When applying for a mortgage, one of the first things mortgage lenders look at for a borrower is the debt-to-income ratio (DTI). It’s a quick snapshot of how much of monthly income is being applied towards debt, and whether you can repay the new loan you are applying.
But here’s something that often surprises homebuyers: Not all your monthly housing expenses are included in the DTI ratio.
Let’s break down what doesn’t count toward your DTI — and why you should still factor them into your budget.
What Is in Your DTI?
Lenders include:
- Your future housing payment (principal, interest, property taxes, insurance, and HOA Dues)
- Housing payment on properties you already own
- Monthly debts like credit cards, car loans, student loans, etc. other obligations (alimony & child support)
- Non-Borrowing Spouse’s Debt (VA and FHA only)
What’s NOT Included in Your DTI?
Even though these costs don’t show up in your DTI calculation, they still affect your monthly cash flow:
- Utilities
Electric, gas, water, trash, and internet might not factor into your DTI, but they are part of your monthly expenses. - Home Maintenance + Repairs
Even with a brand-new home, things wear out over time. It’s a good idea to set aside about 1% of your home’s value each year for maintenance. - Furnishings + Appliances
Most sellers don’t leave it all behind, so you’ll probably need to budget for basics like furniture, curtains, a fridge, and a washer/dryer. - HOA Due Increases
When you purchase a home with HOA dues, underwriting calculates your DTI with the current HOA dues but it is not uncommon for these dues to increase over time.
Why It Matters
Just because it’s not in your DTI doesn’t mean it won’t affect your financial comfort. If a borrower qualifies for a $3,000/month mortgage but has not budgeted for $500/month in utilities and $350 in average monthly repairs or furnishings, it can feel consuming.
The Bottom Line
Your DTI ratio is important, but it’s not the entire story. Make sure you’re factoring in the full picture of homeownership so you can feel confident in your monthly budget.
If you have questions, please contact our office to discuss your mortgage needs with one of our experienced Mortgage Loan Originators at (760) 930-0569.
