Front-end DTI percentage example: PITI $1,500 and gross monthly income $5,000. What is the front-end DTI percentage?

Front-end DTI percentage example: PITI $1,500 and gross monthly income $5,000. What is the front-end DTI percentage?

• A. 25%
• B. 30%
• C. 28%
• D. 32%

Answer: (B)

Front-end DTI shows what share of gross monthly income goes toward housing costs (principal, interest, taxes, and insurance). It’s found by dividing the monthly housing payment by gross monthly income. Here, the housing payment is 1,500 and the gross income is 5,000. 1,500 ÷ 5,000 = 0.30, which is 30%. So the front-end DTI is 30%. This percentage helps lenders assess whether monthly housing costs fit within typical underwriting guidelines. If the housing payment were higher or income lower, the percentage would rise accordingly.

Front-end DTI shows what share of gross monthly income goes toward housing costs (principal, interest, taxes, and insurance). It’s found by dividing the monthly housing payment by gross monthly income. Here, the housing payment is 1,500 and the gross income is 5,000. 1,500 ÷ 5,000 = 0.30, which is 30%. So the front-end DTI is 30%. This percentage helps lenders assess whether monthly housing costs fit within typical underwriting guidelines. If the housing payment were higher or income lower, the percentage would rise accordingly.