Lenders use DTI to judge whether you can carry a new mortgage payment on top of what you already owe. It’s one of the main numbers behind a pre-approval.
How do you calculate DTI?
Add up your monthly debt payments, including the new housing payment, and divide by your gross monthly income: what you earn before taxes and deductions. Multiply by 100 to
The CFPB’s example: a $1,500 mortgage payment, a $100 auto loan and $400 in other debts add up to $2,000/month. On $6,000 of gross monthly income, that’s a DTI
What counts as debt?
Lenders count the monthly payments on your credit report and other obligations you must pay: car loans, student loans, minimum credit card payments, personal loans, child support and alimony. The new housing payment counts in full, including principal, interest, property taxes, homeowners insurance, mortgage insurance and HOA dues, often summed up as PITI.
Everyday costs such as groceries, utilities, phone bills and car insurance usually aren’t counted, though you still have
What’s the difference between front-end and back-end DTI?
The front-end, or housing, ratio is just the housing payment divided by income. The back-end ratio includes every debt, and it’s usually what people mean by DTI. Some programs set limits on both, written as a pair such as 31/43: 31% for housing and
What DTI do lenders allow?
It depends on the program and the lender; the CFPB notes that different loan products and lenders have different limits. Fannie Mae, which sets the rules for many conventional loans, allows up to 36% on loans underwritten by hand, up to 45% with credit score and reserve requirements met, and up to 50% on loans approved through
An FHA loan underwritten by hand starts at 31/43, with up to 40/50 allowed for borrowers with compensating factors such as cash reserves. A VA loan uses 41% as its standard and looks at residual income alongside it. Meeting a program’s maximum isn’t the same as being comfortable: a lower ratio leaves room for
How can you lower your DTI?
Pay off a debt with a large monthly payment, avoid new debt while you shop, add a co-borrower’s income, or shrink the housing payment with a lower price, a larger down payment or a lower interest rate. discount points can buy a lower rate for cash at closing. Ask your lender how they’d treat a specific debt before you
DTI on $7,500 of gross monthly income
| Gross monthly income | $7,500 |
|---|---|
| New housing payment (PITI plus HOA) | $2,400 |
| Car loan | $450 |
| Student loan | $250 |
| Credit card minimums | $100 |
| Total monthly debts | $3,200 |
| Front-end ratio ($2,400 ÷ $7,500) | 32% |
| Back-end ratio, or DTI ($3,200 ÷ $7,500) | 42.7% |
Paying off the $450 car loan would bring this borrower’s DTI down to about 36.7%. Whether 42.7% qualifies depends on the program and how the
Common mistakes
- Using take-home pay instead
of gross income. - Leaving property taxes, insurance, mortgage insurance or HOA dues out of
the housing payment. - Financing a car or furniture between
pre-approval and closing. - Treating the maximum DTI a program allows as
a comfortable budget.
Questions
Is 43% the maximum DTI for a mortgage?
Not as a universal rule. Limits vary by program and lender: Fannie Mae allows up to 50% on loans approved through its automated system, while FHA’s manual guidelines start
Does my current rent count in DTI?
Usually not when you’re buying a home to live in, because the new housing payment replaces it. If you’ll keep paying rent or another mortgage, ask your lender
Does DTI affect your credit score?
No. Your income isn’t on your credit report, so DTI isn’t part of your score, though the debts behind it and how you
Sources
- CFPB: What is a debt-to-income ratio?
- Fannie Mae Selling Guide B3-6-02: Debt-to-income ratios
- HUD: FHA Single Family Housing Policy Handbook 4000.1
- 38 CFR 36.4340: VA underwriting standards
Written and checked by the Broker & Agent team on October 2, 2026. General information, not legal, tax or lending advice. Something out of date? Tell us.