Mortgage Planning
Default Probability Explained Mortgage Tool
This guide explains default probability in plain language: what the metric is, what it is not, what drives it (DTI, costs, shocks), and how to use it safely when you compare scenarios.
Published: January 1, 2026 · Updated: January 1, 2026 · By FinToolSuite Editorial
Open the stress tester
Run scenarios, view default probability, and compare direction across two runs.
Disclaimer
- Educational only. Probability is model-based, not a prediction. No guarantees.
- Results change with assumptions.
- Examples are simplified.
Default probability explained
It measures how often simulated paths cross stressed thresholds. It depends on the assumptions you set and is meant for scenario comparison, not certainty.
What it is not
It is not a lender decision, not personal advice, and not a guaranteed outcome. Treat it as directional context beside safe loan and DTI distribution.
Drivers of the metric
- Higher DTIs raise modeled stress.
- Higher taxes, HOA, or maintenance increase pressure.
- Rate or income shocks widen the simulated tails.
How to use it safely
Compare two scenarios with one change at a time. Keep assumptions the same, read the direction of default probability, and pair it with safe loan and DTI percentile changes.
FAQs
Why can the number change between runs?
Changing inputs or assumptions changes modeled outcomes. Keep assumptions fixed when comparing.
Is lower always better?
Lower model risk can feel safer, but focus on scenarios that reflect your assumptions. There is no guarantee.
Should I round inputs?
Conservative rounding (debts up, income down if unsure) can make results more cautious.
Where can I see more on simulations?
Read Monte Carlo simulation mortgage risk explained for context.
Where is the Privacy Policy?
See Privacy Policy before sharing exports.
Check your scenarios
Run the mortgage affordability stress tester, note default probability across two runs, and label them clearly.