What is a debt-to-income ratio?
Your debt-to-income ratio (DTI) is the share of your gross monthly income that goes to debt payments. Lenders use it to judge whether you can comfortably take on a new loan, and it's one of the main numbers in a mortgage application, alongside your credit score and down payment.
The Consumer Financial Protection Bureau uses this example: a $1,500 mortgage payment, a $100 car payment and $400 of other debt payments add up to $2,000 a month. With $6,000 of gross monthly income, the DTI is $2,000 ÷ $6,000 = 33%. Those are the default numbers in the calculator above.
Front-end vs back-end DTI
- Front-end DTI counts only housing: rent, or a mortgage payment including property tax, homeowners insurance, mortgage insurance and HOA dues.
- Back-end DTI counts housing plus every other recurring debt payment. This is the number most lenders mean by "DTI."
What DTI do lenders accept?
There's no single cutoff: each lender and loan program sets its own. As a widely used reference, Fannie Mae's guidelines for conventional mortgages set a maximum total DTI of:
- 36% for manually underwritten loans,
- up to 45% for manually underwritten loans when the borrower meets extra credit score and reserve requirements,
- up to 50% for loans approved through its automated underwriting system.
Government-backed programs (FHA, VA, USDA) have their own rules. A traditional rule of thumb, the "28/36 rule," suggests keeping housing under 28% of gross income and total debt under 36%. Meeting a limit doesn't guarantee approval, and staying well below it leaves room in your budget for savings and surprises.
What counts and what doesn't
Included: housing payments, car loans, student loans (the required monthly payment), minimum credit card payments, personal loans, and court-ordered obligations such as child support or alimony.
Usually not included: utilities, groceries, phone and internet, insurance premiums (other than those in a mortgage payment), commuting costs and other everyday spending. These still matter for your budget, even if they don't count toward DTI.
How to lower your DTI
- Pay off small installment loans. Clearing a loan removes its entire payment from the calculation.
- Pay down credit cards. Lower balances mean lower minimum payments. See how long that takes with our credit card payoff calculator.
- Avoid new debt before applying. A new car loan right before a mortgage application can push you over a limit.
- Count all qualifying income. A co-borrower's income, or documented side income, can lower the ratio.
- Lower the housing payment. A larger down payment or a less expensive home reduces the biggest line in most people's DTI.
Frequently asked questions
How do you calculate debt-to-income ratio?
Add up your monthly debt payments (housing, car loans, student loans, minimum credit card payments and other loans) and divide by your gross monthly income, meaning income before taxes and deductions. Multiply by 100 to get a percentage. For example, $2,000 of monthly debt payments on $6,000 of gross income is a DTI of about 33%.
What is a good debt-to-income ratio?
Lower is better, and limits vary by lender and loan type. As a reference point, Fannie Mae's guidelines cap total DTI at 36% for manually underwritten conventional loans, up to 45% with strong credit and reserves, and up to 50% for loans approved through its automated underwriting system. A common rule of thumb is to keep housing costs under about 28% of gross income and all debts under about 36%.
What's the difference between front-end and back-end DTI?
Front-end DTI counts only housing costs: rent, or a mortgage payment including property tax, insurance and HOA dues. Back-end DTI counts housing plus all other debt payments. When lenders talk about "DTI" without qualification, they usually mean back-end.
What counts as debt in DTI?
Recurring obligations that appear on your credit report or a loan agreement: housing, auto loans, student loans, minimum credit card payments, personal loans, and obligations like child support. Everyday expenses such as utilities, groceries, phone bills and insurance premiums are generally not included.
How can I lower my DTI quickly?
Pay off small installment debts, pay down credit card balances (which lowers their minimum payments), avoid new credit before applying for a mortgage, or increase documented income. Our debt payoff calculator helps plan the fastest route.
Sources
- What is a debt-to-income ratio?, Consumer Financial Protection Bureau
- Selling Guide B3-6-02, Debt-to-Income Ratios, Fannie Mae
This calculator is for educational purposes and gives estimates based on the numbers you enter. It is not financial, tax or legal advice. Last reviewed October 2026.