DTI

What is the maximum DTI for a conventional loan?

Short answer

Fannie Mae's automated underwriting commonly accepts DTI up to 50%, with strong files clearing higher. Freddie Mac's LP often runs similar. Lender overlays usually cap lower — 45% is common, 50% is the practical ceiling for many channels. Manual underwriting is much stricter (often 36-45%).

Plain-English explanation

DTI is total monthly debts (the new conventional housing payment + taxes + insurance + HOA + CDD if any, plus credit card minimums, car loans, student loans, child support, alimony) divided by gross monthly income. Fannie's DU and Freddie's LP both have models that can clear DTIs above 45%, and conforming files at 50%+ are common when reserves, credit, and income stability are strong. Lender overlays often cap at 45%. Manual underwriting drops the cap materially. Subject to Fannie/Freddie guidelines and lender overlays.

Practical example

A buyer at 47% DTI with a 720 credit score, 6 months of reserves, and clean recent payment history clears Fannie Mae DU on a conforming conventional loan. A second buyer at 43% DTI with the same income may get denied at one lender (overlay cap of 43%) and approved at another with a 50% overlay — the underwriting outcome differs by lender.