Debt-to-Income Calculator
Calculate your debt-to-income (DTI) ratio and see if you qualify for a mortgage or loan.
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Frequently Asked Questions
What is a good debt-to-income ratio?
Below 36% is considered good. Fannie Mae allows a DTI up to 36% for most manually underwritten loans, up to 45% with strong credit and reserves, and up to 50% for loans approved by Desktop Underwriter. The best mortgage rates go to borrowers with DTI below 28%. FHA loans allow DTI up to 50% with compensating factors like excellent credit or large down payment.
How do I lower my debt-to-income ratio?
To lower DTI: (1) pay down existing debts, especially high minimum payment balances, (2) increase income through a raise, second job or freelance work, (3) avoid taking on new debt before applying for a loan. Even paying off a small $200/month debt can meaningfully shift your DTI.
What is front-end vs back-end DTI?
Front-end DTI includes only housing costs (mortgage/rent, taxes, insurance) divided by income. Back-end DTI includes all monthly debt payments. Conventional lenders prefer front-end DTI below 28% and back-end below 36%. FHA uses 31%/43% guidelines.
DTI examples against the 28%, 36% and 43% limits
Debt-to-income ratio = monthly debt payments / gross monthly income. Lenders use two versions. The front-end ratio counts only the proposed housing payment (mortgage, taxes, insurance, HOA) and the usual cap is 28%. The back-end ratio adds every other recurring debt (car loans, student loans, credit card minimums, child support) and the caps are 36% for the most favorable terms and 43% for most qualified mortgages. FHA loans can go to 50% with strong compensating factors.
| Gross monthly income | Total monthly debts | Back-end DTI | Max housing payment (28%) | Max total debt (36%) | Max total debt (43%) |
|---|---|---|---|---|---|
| $4,000 | $1,800 | 45.0% | $1,120 | $1,440 | $1,720 |
| $5,000 | $1,200 | 24.0% | $1,400 | $1,800 | $2,150 |
| $6,000 | $2,400 | 40.0% | $1,680 | $2,160 | $2,580 |
| $8,000 | $2,800 | 35.0% | $2,240 | $2,880 | $3,440 |
| $10,000 | $3,600 | 36.0% | $2,800 | $3,600 | $4,300 |
Worked example: can this household qualify?
Gross income $7,000 a month ($84,000 a year). Existing debts: car $400, student loan $250, credit card minimums $150, total $800. A proposed mortgage payment of $1,800 including taxes and insurance. Front-end: 1,800 / 7,000 = 25.7%, under 28%. Back-end: (1,800 + 800) / 7,000 = 37.1%, just over the 36% conventional target but well under 43%. This borrower qualifies for a qualified mortgage, and would get the best conventional pricing by paying the credit card balance down so minimums fall by about $80, which brings the back-end ratio to 36.0%.
What counts as debt, and what does not
Counted: minimum payments on credit cards (not the balance), car and personal loan payments, student loans (lenders use the actual payment or 0.5% to 1% of the balance if it is deferred), alimony and child support, the full proposed housing payment. Not counted: utilities, phone, insurance premiums other than homeowners, groceries, subscriptions, taxes withheld from pay. This is why DTI understates how tight a budget actually is: a household at 36% DTI with high childcare and utility costs can have far less room than the ratio suggests.
Income is gross, and it has rules
Lenders use gross pay before tax for salaried work. Hourly income is averaged over the last 12 to 24 months. Bonus, commission and overtime count only with a two year history and a reasonable expectation of continuing. Self-employed income is the two year average of net profit on Schedule C after add-backs for depreciation. Rental income counts at 75% of the lease to allow for vacancy. A raise that started last month will not count until it shows up on pay stubs.
Bringing a high ratio down before applying
Three levers move the ratio fastest. Pay a small loan off entirely, which removes its whole payment (clearing a $3,000 car loan with a $280 payment does more than paying $3,000 off a credit card). Avoid new credit for six months before applying. Add a co-borrower whose income counts in full. Refinancing a car to a longer term lowers the payment and the ratio, but costs more in interest; it is a last resort, not a first move.