Last updated: October 5, 2026
Your debt-to-income ratio (DTI) is one of the first numbers a mortgage lender checks. It compares what you owe each month with what you earn, and it helps decide both whether you qualify and how much you can borrow. Here is how to calculate it and how to improve it.
How to calculate DTI
DTI = total monthly debt payments ÷ gross monthly income × 100
Lenders look at two versions:
- Front-end ratio: just your housing payment (principal, interest, property tax, homeowners insurance, mortgage insurance and HOA dues) divided by gross monthly income.
- Back-end ratio: housing payment plus all other recurring debts, divided by gross monthly income. This is the number most people mean by “DTI”.
Worked example
A household earns $90,000 a year, or $7,500 a month before taxes.
| Monthly payment | Amount |
|---|---|
| New housing payment (P&I, tax, insurance, PMI) | $1,900 |
| Car loan | $450 |
| Student loan | $300 |
| Credit card minimums | $100 |
| Total | $2,750 |
- Front-end ratio: $1,900 ÷ $7,500 = 25.3%
- Back-end ratio: $2,750 ÷ $7,500 = 36.7%
Paying off the $450 car loan would drop the back-end ratio to 30.7%, often a bigger improvement than months of extra saving.
What DTI do lenders allow?
- The 28/36 rule is a conservative budgeting guide: 28% for housing, 36% for all debt. See how much house you can afford.
- Fannie Mae conventional loans: up to 36% for manually underwritten loans, which can be exceeded up to 45% with strong credit and reserves, and up to 50% for loans approved through Fannie Mae’s automated underwriting system.
- FHA loans can also allow higher ratios with compensating factors such as savings or a strong credit history.
- Jumbo lenders are often stricter. See jumbo loans explained.
Qualifying at a high DTI does not mean the payment is comfortable. A ratio near 50% leaves little room for savings, repairs or emergencies.
What counts and what doesn’t
- Included: mortgage or rent being replaced by the new loan’s payment, car loans, student loans (lenders use a calculated payment if yours is deferred), minimum card payments, personal loans, child support and alimony.
- Not included: utilities, phone bills, groceries, car insurance, health insurance and other living expenses.
How to lower your DTI
- Pay off small balances with few payments left.
- Pay down credit cards, which also helps your credit score.
- Avoid new loans or financing until after closing; see pre-approval vs. pre-qualification.
- Increase your down payment to reduce the housing payment; see how much down payment you need.
- Add a co-borrower whose income counts toward the loan.
Estimate your housing payment with our mortgage calculator, then add your other debts to find your DTI.
Frequently asked questions
What is a good debt-to-income ratio for a mortgage?
Many lenders prefer a total debt-to-income ratio of 36% or less, and the 28/36 rule is a common budgeting guide. Fannie Mae allows up to 50% for loans approved through its automated underwriting system, but a lower ratio is safer for your budget.
Is DTI based on gross or net income?
Lenders use gross monthly income, which is your income before taxes and deductions.
What debts are included in DTI?
The new housing payment (principal, interest, taxes, insurance, mortgage insurance and HOA dues) plus recurring debts such as car loans, student loans, minimum credit card payments, personal loans, and child support or alimony. Utilities and groceries are not included.
How can I lower my DTI quickly?
Pay off a small installment loan or reduce credit card balances, avoid new debt, add a co-borrower with income, or choose a less expensive home to lower the housing payment.
Sources: Fannie Mae Selling Guide B3-6-02: Debt-to-Income Ratios; CFPB: What is a debt-to-income ratio?
This article is for educational purposes only and is not financial advice. Loan programs, rates and rules change; confirm details with your lender or a HUD-approved housing counselor.