PTI and DTI: Two Different Payment Questions
PTI asks how much of your qualifying monthly income the proposed payment would take. DTI asks what all your qualifying monthly debt payments—including that new payment—would take. Neither tells you whether the payment will feel comfortable once fuel, upkeep and the rest of life are included.
“I know about debt-to-income. Now you're asking about payment-to-income?” They look at related information, but they ask different questions.
PTI: how large is this payment?
For a simple illustration, a $600 proposed payment divided by $6,000 monthly income is 10%. That is payment-to-income, or PTI. The program determines what qualifies as income and what belongs in the payment figure, including whether insurance or other required amounts are included.
DTI: what does the whole debt picture look like?
Suppose qualifying existing monthly debt payments are $1,800. Add the $600 proposed payment and divide the $2,400 total by the same $6,000 income. That gives 40% DTI for this illustration.
Do not add 10% PTI to 40% DTI. The proposed payment is already included in the DTI calculation.
These are illustrations, not approval cutoffs
There is no single percentage that guarantees every lender's approval. Income treatment, obligations and program limits need to be checked against the actual application.
Also, qualifying for a payment is not the same as enjoying life with it. Storage, insurance, maintenance, fuel and your other household spending belong in your own budget even when a particular expense is not part of the lender's debt-ratio calculation.
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Educational information, not a loan offer or guarantee of approval. Requirements depend on the lender and transaction.