How to calculate DTI
DTI = total monthly debt payments ÷ gross monthly income × 100
Example: $1,700 housing + $670 other debts = $2,370. Divided by $6,500 income, that is a back-end DTI of 36.5%. The front-end DTI is $1,700 ÷ $6,500 = 26.2%.
How lenders read your DTI
| Back-end DTI | What it usually means |
|---|
| Under 36% | Comfortable. Most lenders see you as a strong borrower. |
| 36% to 43% | Manageable. You can qualify for many mortgages, sometimes with conditions. |
| 43% to 50% | Stretched. Some programs allow it with strong credit or cash reserves. |
| Over 50% | High. Most lenders will decline new credit until debts come down. |
How to lower your DTI
- Pay down balances with the highest monthly payments first, like a car loan near its end.
- Avoid new debt in the months before applying for a mortgage.
- Increase documented income with a raise, side income or a co-borrower.
- Refinance a high-payment loan to a longer term, though this can cost more interest.
Planning to buy? See what fits your ratio with the home affordability calculator.
Last reviewed October 2026.
Frequently asked questions
What is a debt-to-income ratio?
Your debt-to-income ratio (DTI) is the share of your gross monthly income that goes to debt payments. Lenders use it to judge whether you can take on a new loan.
What is a good DTI ratio?
Under 36% is generally seen as healthy, with no more than 28% going to housing. Many mortgage programs accept up to 43%, and some allow up to 50% with strong credit or savings. Below 20% is excellent.
What is the difference between front-end and back-end DTI?
Front-end DTI counts only housing costs: rent or mortgage, property tax, homeowners insurance and HOA. Back-end DTI counts housing plus every other monthly debt payment, such as car loans, student loans and credit card minimums.
Should I use gross or net income?
Lenders use gross income, before taxes and deductions. Include salary, wages, bonuses you receive regularly, self-employment income, alimony and other steady income you can document.
What is not included in DTI?
Everyday living costs like groceries, utilities, phone bills, gas, health insurance and subscriptions are not counted, even though they matter for your budget.