How DTI is calculated
Example: with $6,000 a month before tax, a $1,500 mortgage, a $400 car payment, $200 of student loans and $100 of card minimums, your debts are $2,200 a month. Your back-end DTI is $2,200 ÷ $6,000 = 36.67%, and your front-end (housing only) DTI is 25%.
Use payments, not balances, and gross income before tax. Count minimum payments on cards, not what you actually pay. Don't count utilities, phone bills, insurance or groceries.
What lenders look for
A common rule of thumb is 28/36: housing under 28% of gross income and all debts under 36%. The Consumer Financial Protection Bureau has said that to get a standard Qualified Mortgage, your DTI generally must be at or below 43%. FHA and some conventional loans can go higher with good credit or savings, but a lower ratio usually gets better terms.
| DTI | How lenders tend to see it |
|---|---|
| 36% or less | Comfortable |
| 36% to 43% | Acceptable for many loans |
| 43% to 50% | Possible with compensating factors |
| Over 50% | Hard to qualify |
Frequently asked questions
What is a good debt-to-income ratio?
36% or lower is generally considered good. Many mortgage programs accept up to 43%, and some go higher with strong credit.
Does rent count in debt-to-income ratio?
Your current rent usually isn't counted when you apply for a mortgage, because the new mortgage payment replaces it. Enter the expected mortgage payment instead to see your ratio after buying.
How can I lower my DTI?
Pay down debts with the highest monthly payments, avoid new loans before applying, or increase income. Paying off a $400 car loan on $6,000 a month lowers DTI by 6.7 points.
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