What is the maximum total debt ratio (PITI + long-term debt obligations) that should not exceed for conventional loans?

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In the context of conventional loans, the maximum total debt ratio refers to the proportion of a borrower's monthly gross income that is allocated to cover housing expenses and other long-term debt obligations. This ratio is often expressed as a percentage.

The industry standard for the total debt-to-income ratio typically should not exceed 36%. This figure is used by lenders to assess an applicant's ability to manage monthly payments and their overall financial health. The ratio includes the monthly costs of housing—such as Principal, Interest, Taxes, and Insurance (PITI)—combined with any other long-term debt payments, such as student loans or car loans.

By maintaining the total debt ratio at or below 36%, lenders mitigate the risk of default, ensuring that borrowers are not over-leveraged. This benchmark helps borrowers make responsible financial decisions, promoting sustainable debt levels and financial stability.

Other percentages provided in the options relate to various aspects of mortgage lending, but 36% is a widely recognized threshold for total debt obligations in conventional financing contexts.