The rule in one line
Under the ability-to-repay rule (12 CFR 1026.43), a lender has to conclude, reasonably and in good faith, that you are able to repay. One of the things it must weigh is your monthly debt-to-income ratio or your residual income.
Run your own numbers in the calculator →
How the ratio is defined
The rule compares your total monthly debt obligations with your total monthly income. On the debt side it counts the new mortgage payment, a second loan taken out at the same time, mortgage-related obligations, existing debts, alimony and child support.
What counts as mortgage-related
Property taxes, insurance premiums the creditor requires, fees and special assessments from a condominium, cooperative or homeowners association, ground rent and leasehold payments.
No single number
The official commentary is explicit that the section sets no particular ratio that creditors must meet. An appropriate threshold is for the creditor to decide. That is why this tool asks you for the limit instead of supplying one.
Where program limits come from
Lenders and the programs that buy or insure loans write their own limits, and they vary by loan type and underwriting method. The federal consumer bureau puts it plainly: different loan products and lenders will have different DTI limits. A published example is linked below.
Try it
Enter the limit you were quoted, then a lower one. The difference in price shows how much room the ratio itself is giving you.