Your debt-to-income ratio (DTI) is one of the most important numbers in your mortgage application yet most people don't know theirs. It compares how much you owe each month to how much you earn, and lenders use it to judge whether you can handle a mortgage payment.
What Is Debt-to-Income Ratio?
DTI = Total Monthly Debts ÷ Gross Monthly Income × 100
There are actually two DTI ratios lenders look at:
Front-End DTI (Housing Ratio)
Only includes housing costs: mortgage payment, property taxes, insurance, PMI, and HOA fees.
Target: 28% or lower
Back-End DTI (Total Debt Ratio)
Includes all monthly debts: housing costs plus car payments, student loans, credit card minimums, child support, and any other recurring debts.
Target: 36% or lower (maximum: 43% for most loans)
📝 Example Calculation
Gross monthly income: $7,083 ($85,000/year)
Proposed housing costs: $1,983
Other debts: $550 (car + student loans + credit cards)
Front-end DTI: $1,983 ÷ $7,083 = 28.0% ?
Back-end DTI: $2,533 ÷ $7,083 = 35.8% ?
🧮 Calculate Your DTI Instantly
Enter your income and debts to see your front-end and back-end DTI with color-coded results.
Check My DTI ?What Lenders Require
| LOAN TYPE | MAX DTI | NOTES |
|---|---|---|
| Conventional | 4345% | 36% preferred |
| FHA | 4350% | Higher with compensating factors |
| VA | 41% | No hard limit, case by case |
| USDA | 41% | Strict limit |
What Counts as "Debt" in DTI?
Included ?
- Mortgage payment (including taxes, insurance, PMI, HOA)
- Car loan/lease payments
- Student loan payments
- Credit card minimum payments
- Personal loan payments
- Child support / alimony
- Other loan payments
NOT Included ?
- Utilities (electric, water, gas, internet)
- Groceries and food
- Health insurance premiums
- Cell phone bill
- Subscriptions (Netflix, gym, etc.)
- Income taxes
How to Improve Your DTI
If your DTI is too high, focus on these strategies:
- Pay off credit card balances This is the fastest way to lower DTI since minimums drop immediately
- Pay off small debts completely Eliminating a $200/month car payment drops your DTI instantly
- Don't take on new debt Avoid new loans or credit cards before applying
- Increase your income A raise, side job, or additional documented income lowers your ratio
- Choose a less expensive home Lower home price = lower mortgage = lower DTI
- Make a larger down payment Reduces loan amount and monthly payment
- Refinance existing loans Extending a car loan term lowers the monthly payment (but increases total interest)
DTI vs. Credit Score: Which Matters More?
Both matter, but differently:
- Credit score determines your interest rate higher score = lower rate
- DTI determines your approval and loan amount lower DTI = more home you can afford
You need both a good credit score AND an acceptable DTI to get approved for a mortgage at a good rate.
The Bottom Line
Your DTI ratio is a critical number that directly affects your mortgage approval and how much house you can afford. Aim for a back-end DTI of 36% or lower for the best loan options. If yours is higher, focus on paying down existing debts before applying for a mortgage.