DTI, LTV, PITIA and Cash-to-Close
The arithmetic is easy. The professional skill is choosing the correct inputs and understanding what changes when one input changes.
Front vs Back DTI
Front / housing ratio
Proposed monthly housing expense ÷ gross qualifying monthly income.
Proposed monthly housing expense ÷ gross qualifying monthly income.
Back / total DTI
Proposed housing + qualifying monthly liabilities ÷ gross qualifying monthly income.
Proposed housing + qualifying monthly liabilities ÷ gross qualifying monthly income.
Example: Income $8,000; PITIA $2,300; auto $525; cards $175; student loan $300. Front = 2,300 ÷ 8,000 = 28.75%. Back = 3,300 ÷ 8,000 = 41.25%.
Program Ratio Context
| Program | Front ratio teaching point | Back ratio teaching point |
|---|---|---|
| FHA | Manual baseline 31% housing. | Manual baseline 43%; higher manual ratios need specified compensating factors. AUS is not a universal fixed cap. |
| VA | No separate agency front-end benchmark to memorize. | 41% total-DTI guide; residual income is primary and >41% needs closer review. |
| USDA | 34% housing standard. | 41% total debt standard, with applicable flexibility. |
| Conventional/Fannie | No universal front cap; use as diagnostic. | Manual 36%, up to 45% with required factors; DU generally up to 50%. |
| DSCR | Personal front/back DTI often not primary. | Investor-specific; property DSCR may be the central ratio. |
LTV and CLTV
LTV
First mortgage amount ÷ applicable value basis.
$285,000 ÷ $300,000 = 95%.
First mortgage amount ÷ applicable value basis.
$285,000 ÷ $300,000 = 95%.
CLTV
Total mortgage liens ÷ applicable value basis.
($240,000 first + $30,000 second) ÷ $300,000 = 90%.
Total mortgage liens ÷ applicable value basis.
($240,000 first + $30,000 second) ÷ $300,000 = 90%.
PITIA
P&I + property taxes + hazard insurance + mortgage insurance/annual fee where applicable + HOA/association and other required housing expense. Missing taxes, insurance, MI or HOA makes DTI wrong even if principal and interest are correct.