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Mortgage  Question?
Rent or mortgage payment in debt-to-income ratio?

Does the lender use my current rent payment or future mortgage payment to determine my debt-to-income ratio when I apply for a mortgage? I am concerned my current high rent payment will count against me when I apply for a mortgage.

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

Mortgage lenders do not use your current rent payment to calculate your debt-to-income ratio when you apply for a mortgage. Instead, lenders use your anticipated total monthly housing expense (mortgage payment plus property taxes, homeowners insurance and other applicable housing related expenses) to determine your debt-to-income ratio for mortgage. For example, if you are currently renting a home for $2,000 per month and you buy a home with projected total monthly housing expense of $1,600 per month then the lender uses the $1,600 figure to calculate your debt-to-income ratio, not your $2,000 monthly rent. The lender assumes that you will move out of the house you are renting and stop paying rent so that figure is not relevant to your mortgage application. The only figure that matters is the total monthly housing expense for the home you are buying.

We provide comprehensive overviews of total monthly housing expense and borrower debt-to-income ratios on FREEandCLEAR.

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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