Is There a 43% DTI Limit for a Mortgage? What the Qualified Mortgage Rule Says Now

No. The current text of the federal qualified mortgage rule contains no percentage cap on debt-to-income ratio. A lender must consider and verify your DTI (or your leftover monthly income), and the loan must stay under a price limit, but no fixed 43% or 45% figure appears in the rule. Neither source states a percentage, so any ceiling a lender quotes is its own requirement.

For how to calculate DTI itself, see the debt-to-income ratio explainer.

1. What the rule actually requires

Regulation Z, section 1026.43, is the ability-to-repay rule. Paragraph (e)(2) defines a general qualified mortgage (QM). Among its conditions, the lender must:

• consider the borrower's income or assets, debts, alimony, child support, and "monthly debt-to-income ratio or residual income," calculated under paragraph (c)(7);
• verify income, assets, and debts using reasonably reliable third-party records;
• underwrite using the maximum interest rate that may apply in the first five years;
• keep the loan term at 30 years or less, with no negative amortization, interest-only period, or balloon payment; and
• keep points and fees within the limits of paragraph (e)(3).

It must also pass a price test: the loan's APR cannot exceed the average prime offer rate (APOR) for a comparable loan by the amounts in paragraph (e)(2)(vi).

Notice what is missing: no sentence says "DTI must not exceed" a number. Paragraph (c)(7) defines the ratio as total monthly debt obligations divided by total monthly income and says a lender that considers it must use that ratio. That is a definition and a duty to look, not a limit. The CFPB's plain-language page says the same: the lender must consider either DTI or residual income.

2. The price test that replaced a fixed ratio

For a first-lien loan of $110,260 or more (a base figure the rule indexes for inflation each year), the APR must be less than 2.25 percentage points above APOR (a loan at 2.25 or more points over is outside the general QM). Smaller loans get bigger margins: 3.5 points from $66,156 up to $110,260, and 6.5 points below $66,156 (also base figures, indexed).

There is a second line inside that. A "higher-priced covered transaction" is one with an APR 1.5 or more points above APOR. A QM below that line gets a safe harbor. A QM at or above 1.5 points is only presumed to comply, and a borrower can try to rebut the presumption by showing that income, debts, and the new payment left too little residual income for living expenses.

Illustration with assumed numbers: say APOR is 6.00% for a $320,000 first-lien loan.

The cutoffs here are 6.00% + 1.50 = 7.50% and 6.00% + 2.25 = 8.25%. The 6.00% APOR is hypothetical; the real figure depends on the date the rate is set.

3. So where does a "43%" come from?

The rule's text does not mention it. What the sources support is narrower. The CFPB describes government-backed loans (FHA, USDA, VA) as qualified loans, and says conventional loans backed by Fannie Mae and Freddie Mac and jumbo loans must meet special requirements to qualify. Neither source gives a DTI percentage. If a lender quotes you a ceiling, it is that lender's or program's own requirement, so ask which one it is.

4. What this means for you

1. Do not treat 43% as a legal line. It is not in the current rule.
2. Expect your DTI to be verified with pay stubs, tax records and credit reports.
3. Watch the rate: a high APR can cost you QM status, and then lenders may decline or price the loan differently.
4. Ask your lender two things: "What DTI limit do you apply to this loan?" and "Is this loan expected to be a QM?"
5. Test the payment against your own monthly budget, since a DTI ratio alone does not show what is left after living expenses.

5. Key takeaways

• Regulation Z requires lenders to consider DTI or residual income, but sets no numeric DTI cap for a general QM.
• The general QM test is price based: APR less than 2.25 points above APOR for loans of $110,260 or more (indexed).
• At 1.5 or more points above APOR, a QM gets a rebuttable presumption instead of a safe harbor.
• A 6.00% APOR example puts the thresholds at 7.50% and 8.25%.
• Neither source gives a DTI percentage, so ask your lender which limit it applies and where it comes from.