Mortgage Basics
Your debt-to-income ratio — or DTI — is one of the first numbers a lender looks at when you apply for a mortgage. It tells them how much of your monthly income is already spoken for, and whether you can realistically handle a mortgage payment on top of it.
Quick answer: Most lenders want a DTI below 43%. Below 36% is considered strong and will qualify you for better rates. Below 28% for housing alone is ideal.
DTI is simple: add up all your monthly debt payments, then divide by your gross monthly income (before taxes).
Monthly debts to include: mortgage payment (proposed), car loans, student loans, credit card minimum payments, personal loans, child support or alimony.
Do not include: utilities, groceries, subscriptions, insurance, or other living expenses.
Example: You earn $7,500/month. You have a $400 car payment, $200 student loan, and a proposed $1,800 mortgage. Total debts = $2,400. DTI = $2,400 ÷ $7,500 = 32% — well within range.
| DTI | What it means | Loan eligibility |
|---|---|---|
| Below 36% | Excellent | Best rates, all loan types |
| 36%–43% | Acceptable | Most conventional loans |
| 43%–50% | Borderline | FHA loans with compensating factors |
| Above 50% | High risk | Difficult to qualify |
Lenders actually look at two DTI numbers. Front-end DTI is just your housing costs divided by income — ideally below 28%. Back-end DTI is all debts including housing — ideally below 36–43%. When lenders say "DTI" they usually mean the back-end number.
If your DTI is too high, you have two levers: increase income or reduce debt. The fastest moves are paying down credit card balances (which reduces minimum payments), paying off any small loans in full, and avoiding taking on new debt for 6 months before applying.
A side income or raise can also help — lenders will count documented overtime, freelance income, and rental income toward your gross monthly figure.
Both matter, but for different reasons. Your credit score determines what rate you qualify for. Your DTI determines how much you can borrow. A great credit score won't save you if your DTI is too high — lenders won't approve a loan they don't think you can repay.
Use our calculator to model different scenarios — adjust your loan amount and see exactly what monthly payment keeps your DTI in range.
Open the Calculator →This article is for educational purposes only and does not constitute financial or mortgage advice. Consult a licensed mortgage professional for guidance specific to your situation.