The one item I find confusing is an interest rate being based on DTI.

There are no conforming interest rates based on DTI. One either qualifies at the best priced lender--or not.

For example, at my best priced wholesale lender, the lowest rate at "par"--no discount point to the lender; no rebate from the lender--is 3.25% for a 30 day lock. Max DTI is 45%.