When analyzing a loan applicant's ability to afford a mortgage, lenders are primarily concerned with what metric?

The debt-to-income (DTI) ratio is a crucial metric for lenders when evaluating a loan applicant’s ability to afford a mortgage. This ratio measures the proportion of an individual's monthly income that goes towards paying debts. By analyzing DTI, lenders gain insight into whether the applicant can manage monthly mortgage payments along with existing debt obligations without facing financial strain. A lower DTI suggests that a borrower has a better chance of comfortably managing their debt, making them a less risky candidate for a loan.

In addition to DTI, other factors such as credit score, net worth, and employment stability also play roles in the lending decision, but DTI serves as a direct measure of financial responsibility concerning debt levels relative to income. Having a strong DTI indicates that the borrower has sufficient income to cover expenses, which is the primary concern for lenders when assessing mortgage applications.