In the mortgage process, debt-to-income (DTI) ratios influence both pricing and loan eligibility. Yet many lenders, loan officers, processors, and operations teams assume the DTI used for mortgage insurance (MI) pricing is the same DTI used to qualify the loan. The reality is, it’s not.
The difference between pre‑MI DTI and eligibility DTI may seem subtle, but misunderstanding it can lead to mispriced MI quotes, underwriting surprises, and avoidable delays, especially on loans with changing income, debts, or housing expenses. Marilyn Richter, Regional Underwriter at Enact, is here to help answer some questions and provide clarity.
In a high-volume, deadline-driven environment, these distinctions are easy to overlook but costly when they are.
The DTI detail that may create rework and delays
Pre‑MI DTI is used for MI pricing. It excludes the MI premium itself and is entered when pulling rate quotes through Enact’s Rate Express, a loan origination system (LOS), or a pricing engine. Remember, changes to principal, interest, taxes, insurance, and association fees (PITIA), other debts, qualifying income, housing expense-to-income (HTI), or DTI can all impact the MI quote, because MI pricing is risk-based and has many variables.
Eligibility DTI, on the other hand, is the full DTI used for underwriting and must meet Enact’s program guidelines. As a best practice, re‑run the rate quote before submitting the file to Enact for underwriting whenever there have been changes since the initial quote.
Example loan scenarios and solutions for lenders:
1. Do I need to include the HOA fee in the HTI/DTI for pricing?
- Yes, you do. Remember, the only part of the PITIA you are backing out of the ratio is the MI premium.
2. If my pre-MI DTI is 50%, can I use that DTI for eligibility?
- The only time that would be okay to use is when the pre-MI DTI is the same as the full DTI. Selecting Single premium (not financed) or selecting Lender Paid, for example, are premium options that exclude MI from the calculation. The full DTI cannot exceed the maximum allowed under our program guidelines.
3. If I can pull a rate quote, does that mean the loan can be approved?
- Not necessarily. Always check our guidelines and review the matrices that include the max DTI allowed based on the program parameters.
Relying on a rate quote alone without validating guideline limits can result in rework, borrower frustration, and pipeline inefficiencies.
Knowledge that strengthens decisions and outcomes
Understanding the difference between eligibility DTI and pre‑MI DTI empowers us in the mortgage industry to:
- Price MI more accurately
- Reduce underwriting surprises
- Avoid unnecessary re-quotes and resubmissions
- Move loans through the pipeline with greater confidence
It’s essential to re-run the MI quote anytime material loan data changes before submitting the file for underwriting or after initial approval, too. Just as important, always confirm the maximum allowable DTI by reviewing Enact’s current guidelines and matrices, not the rate quote alone.
Staying informed isn’t just about compliance, it’s about protecting loan quality, borrower experience, and operational efficiency.
More ways we at Enact can help
DTI calculations influence more than numbers, they shape loan viability. Remaining knowledgeable about how pre‑MI DTI and eligibility DTI differ helps everyone across the mortgage industry make smarter, faster decisions.
That’s why it’s important to keep the conversation going, because when we understand the tools available, we can empower more families to achieve the dream of homeownership. Our Regional Underwriting Team is available to assist you Monday-Friday 8am to 8pm ET at 800-444-5664 option 2.
Enact also offers a suite of tools—including Rate Express®, Underwriting Resources, and training resources to help you along the mortgage origination journey.
Source: Marilyn Richter is a Regional Underwriter at Enact Mortgage Insurance.
The statements in this article are solely the opinions of Marilyn Richter and do not necessarily reflect the views of Enact or its management.
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