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 | 43?45% | 36% preferred |
| FHA | 43?50% | 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.