If you understand these two numbers, you understand most of what stands between you and approval. Let's break them down.
Credit score shows how you have handled borrowing; most California loans want about 620+ (580+ for many FHA loans). Debt-to-income (DTI) compares your monthly debt payments to your monthly income; lenders often allow a DTI up to about 43%–50%, depending on the loan. Lower DTI and higher credit usually mean easier approval and better terms.
What this means
Think of it this way:
- Credit score answers: "Will you pay it back?"
- DTI answers: "Can you afford to pay it back?"
How DTI works
- 1Add up your monthly debt payments. Things like car loans, credit card minimums, student loans, and your future mortgage payment.
- 2Divide by your gross monthly income. That is your income before taxes.
- 3The result is your DTI.
Example
| Item | Amount |
|---|---|
| Future mortgage payment | $2,500 |
| Car loan | $400 |
| Credit cards (minimums) | $200 |
| Student loan | $300 |
| Total monthly debt | $3,400 |
| Gross monthly income | $8,000 |
| DTI | 42.5% |
This is a rounded example, not a quote.
Two kinds of DTI
| Type | What it measures |
|---|---|
| Front-end | Just your housing payment vs income |
| Back-end | All your debts (including housing) vs income |
Lenders usually focus on the back-end number, since it shows your full picture.
Requirements (at a glance)
| Factor | Typical guideline |
|---|---|
| Credit score | ~620+ conventional, ~580+ FHA |
| Back-end DTI | Often up to ~43%–50% |
| Stable income | Usually 2 years of history |
| Payment history | On-time payments matter most |
How to improve your numbers
To raise your credit score:
- Pay every bill on time.
- Lower your credit card balances.
- Avoid new credit before applying. See What Credit Score Do I Need.
Benefits of strong credit and low DTI
Things to watch
What it looks like in practice
Example is for learning only. Your numbers depend on your full financial picture.
Common mistakes
This page is for education only. It is not a loan offer or a promise of approval, rates, or terms. Guidelines vary by lender, and qualification depends on your individual circumstances. Equal Housing Opportunity · NMLS #362311 · CA DRE #01871814.
