Among the following, which aspect is evaluated to understand a borrower's capacity to repay a mortgage?

The debt-to-income (DTI) ratio is a key metric used by lenders to assess a borrower's capacity to repay a mortgage. This ratio compares an individual's total monthly debt obligations to their gross monthly income, giving lenders insight into the borrower’s financial stability and their ability to handle additional debt, such as a mortgage.

A lower DTI indicates that a borrower has a manageable level of debt relative to their income, which suggests greater capacity to make mortgage payments on time. Conversely, a higher DTI might raise concerns for lenders, indicating that the borrower could be over-leveraged, making it more difficult for them to meet their mortgage obligations.

While aspects like down payment, loan type, and mortgage insurance are important in the overall mortgage application process, they do not directly assess a borrower's ability to repay the loan. The down payment shows commitment and reduces loan-to-value ratios, the loan type may influence the interest rate, and mortgage insurance protects the lender in case of default. However, the DTI ratio specifically targets the relationship between income and existing debts, making it the most relevant factor for evaluating repayment capacity.