How to use this calculator
- Enter your gross income. Use your annual salary before taxes, plus any other regular monthly income such as rental income or alimony received. Applying with someone? Include both incomes and both sets of debts.
- Enter your housing payment. Renters enter monthly rent. Homeowners — or anyone applying for a mortgage — enter the full PITI payment: principal, interest, property taxes, homeowners insurance, mortgage insurance and HOA dues.
- Enter your monthly debt payments. Use the minimum required payments that appear on your credit report, not what you choose to pay.
- Pick a target. The results show your ratios, how common loan programs view them, and the largest housing payment that keeps you at your target DTI.
What is a debt-to-income ratio?
Your debt-to-income ratio (DTI) is the share of your gross monthly income that goes to required debt payments. Lenders use it to judge whether you can afford a new loan (see the CFPB’s explanation). There are two versions:
- Front-end DTI (housing ratio) = housing payment ÷ gross monthly income.
- Back-end DTI (total ratio) = all monthly debt payments, including housing ÷ gross monthly income.
To turn the housing payment your DTI allows into a home price, with taxes, insurance and mortgage insurance included, use the house affordability calculator.
When people say “DTI” without qualification, they almost always mean the back-end ratio — and it is the one that decides most approvals.
DTI limits by loan type
Limits vary by program, lender and the strength of the rest of your application (credit score, down payment, cash reserves). These are the typical benchmarks, from Fannie Mae’s Selling Guide and HUD’s FHA handbook:
| Loan type | Front-end | Back-end | Notes |
|---|---|---|---|
| Conventional (Fannie Mae, automated) | — | Up to 50% | Desktop Underwriter can approve up to 50% with strong factors. |
| Conventional (manual underwriting) | — | 36%, up to 45% | 45% requires credit score and reserve requirements. |
| FHA | 31% | 43% | Can go higher with compensating factors or automated approval. |
| VA | — | 41% guideline | Higher ratios allowed with enough residual income. |
| USDA | 29% | 41% | Exceptions possible through automated underwriting. |
| HELOC / home equity loan | — | Typically 43%–50% | Lender-specific; includes the new equity payment. |
You may still see “43%” described as the legal maximum. That comes from the original Qualified Mortgage (QM) rule, but the CFPB replaced the 43% cap with a price-based test in 2021. Many lenders still use 43% as an internal benchmark.
What counts (and doesn’t) in DTI
| Included | Usually not included |
|---|---|
| Rent or mortgage payment (PITI + HOA) | Utilities, phone and internet |
| Car loan and lease payments | Groceries, gas and other living costs |
| Student loan payments (even if deferred) | Health, car and life insurance premiums |
| Credit card minimum payments | Subscriptions and streaming services |
| Personal loans, BNPL loans on your report | Income taxes and payroll deductions |
| Child support and alimony you pay | Medical bills not in collections or on a payment plan |
Worked example
Jordan earns $90,000 a year, or $7,500 a month before taxes. Rent is $2,100, the car payment is $450, student loans are $300 and credit card minimums total $150.
- Front-end DTI: $2,100 ÷ $7,500 = 28% — right at the classic 28% guideline.
- Back-end DTI: ($2,100 + $450 + $300 + $150) ÷ $7,500 = $3,000 ÷ $7,500 = 40%.
At 40%, Jordan qualifies for most conventional and FHA loans but sits above the 36% comfort zone. To get back to 36%, total debts would need to fall to $2,700 — a $300 cut — or the housing payment could be at most $1,800 with the other debts unchanged. Paying off the car loan early would drop the ratio to 34%.
How to lower your DTI
- Pay off small balances completely. Eliminating a debt removes its whole payment from the ratio. Our debt payoff calculator shows which debts you can clear fastest.
- Refinance or consolidate to lower payments. A longer term or lower rate cuts the monthly payment lenders count — see the debt consolidation calculator.
- Pay credit cards down. Minimum payments fall as balances fall, and your credit score often rises too.
- Add documented income. A co-borrower, a raise or two years of documented side income increases the denominator.
- Avoid new debt before applying. Hold off on car purchases or financing furniture until after closing.
- Look at a cheaper home or bigger down payment. A smaller loan means a lower PITI and a lower front-end and back-end ratio.
How lenders calculate DTI
Your debt-to-income ratio (DTI) is one of the first numbers a mortgage or home equity lender calculates. The formula looks simple, monthly debt payments divided by gross monthly income, but the details of which debts and which income count can move your ratio by several percentage points.
This section walks through how lenders typically calculate DTI, so there are no surprises when you apply.
The two ratios
- Front-end (housing) ratio: your proposed housing payment divided by gross monthly income. The housing payment includes principal, interest, property taxes, homeowners insurance, mortgage insurance and HOA dues, together known as PITI.
- Back-end (total) ratio: all recurring monthly debt payments, including the new housing payment, divided by gross monthly income.
Most approvals hinge on the back-end ratio. Typical benchmarks:
- 36% is comfortable.
- 43% is a common limit.
- Up to 50% is possible for conventional loans approved through Fannie Mae’s automated underwriting.
- FHA’s baseline is 31% front-end and 43% back-end.
Check your numbers with the DTI calculator, or see what price those limits allow with the house affordability calculator.
What income do lenders count?
Gross, not take-home. DTI uses income before taxes, retirement contributions and benefits deductions. This makes lender ratios look lower than your real budget does, which is one reason to aim below the maximum.
Stable and documented. Lenders count income they can document and expect to continue:
- Salary and hourly wages. Verified with pay stubs, W-2s and often a verbal check with your employer.
- Overtime, bonuses and commissions. Usually counted only with about a two-year history, and averaged. A declining trend may be discounted.
- Self-employment income. Typically the average of the last two years’ net income from your tax returns, after business deductions. The same write-offs that lower your taxes also lower your qualifying income.
- Rental income. Often counted at about 75% of gross rent, to allow for vacancies and expenses, or taken from Schedule E of your tax return.
- Alimony, child support, Social Security, pensions and disability income. Counted when documented and expected to continue, usually for at least three years for support payments.
Debts: what lenders count
Lenders generally start from your credit report and add obligations that don’t appear on it.
Usually counted:
- Your new housing payment (PITI plus HOA). Your current rent drops out once you buy.
- Other mortgages, HELOCs and home equity loans, including on rental properties. Rental income may offset these.
- Car loans and car leases. Leases are typically counted even when only a few payments remain.
- Student loans, even in deferment or forbearance (see below).
- Credit card minimum payments: the minimum shown on your credit report, not the balance or what you actually pay.
- Personal loans, including “buy now, pay later” loans that are reported.
- Child support and alimony you pay.
- Co-signed loans, unless you can document that the other borrower has made the payments, often for 12 months.
Usually not counted:
- Utilities, phone, internet and streaming.
- Groceries, fuel and other living costs.
- Health, auto and life insurance premiums, except the homeowners insurance in your PITI.
- Income taxes and payroll deductions.
- Medical bills that aren’t in collections or on a payment plan.
Installment loans that are nearly paid off can sometimes be excluded. A common example is a debt with ten or fewer payments remaining whose payment is small relative to your income. Rules vary by program.
How are student loans counted?
Student loans are the most common source of DTI surprises, because lenders count them even when your current payment is zero. Common approaches:
- Payment shown on your credit report or repayment plan. Many programs will use a documented income-driven repayment amount, sometimes even $0 under conventional guidelines.
- A percentage of the balance when no payment is reported, or the loan is deferred. For example:
- FHA: 0.5% of the outstanding balance per month.
- Freddie Mac: 0.5%.
- Fannie Mae: 1% of the balance, or a calculated amortizing payment.
- VA loans use their own threshold calculation, and can exclude loans deferred for at least 12 months past closing.
On $60,000 of deferred student loans, a 1% rule adds $600 a month to your debts. At an income of $7,500 a month, that is 8 percentage points of DTI. Guidelines change, so ask your loan officer which rule applies to you.
A worked example
Jordan earns $90,000 a year, or $7,500 a month, and wants a home with a $2,100 PITI payment. Their other payments are a $450 car loan, $300 of student loans and $150 of card minimums.
- Front-end: $2,100 ÷ $7,500 = 28%.
- Back-end: $3,000 ÷ $7,500 = 40%.
Jordan qualifies for most conventional and FHA loans but sits above 36%. Paying off the car loan before applying would bring the back-end ratio to 34%. Alternatively, a $1,800 housing payment would hit 36% with the current debts.
How to improve your DTI before applying
- Eliminate small debts entirely. Removing a payment helps more than paying down part of a large loan. The debt payoff calculator shows which debts you can clear quickly.
- Pay down credit cards. Minimum payments fall with balances, and your credit score often rises too.
- Don’t open new credit in the months before and during the application. That includes car loans, store cards and financed furniture.
- Document all your income. Bring records for side income, rental income and support payments, if you have the history lenders require.
- Consider a co-borrower whose income and debts are counted together with yours.
- Adjust the purchase. A larger down payment or a lower price reduces PITI directly.
DTI for home equity loans and HELOCs
Home equity lenders also cap DTI, commonly around 43% to 50%, including the new payment. For a HELOC, many lenders qualify you on a payment calculated on the full line amount, not just what you plan to draw. See what a line might cost with the HELOC payment calculator, and how much you could borrow with the home equity calculator.
Sources:
Frequently asked questions
What is a good debt-to-income ratio?
Is DTI calculated on gross or net income?
Does DTI affect my credit score?
What DTI do I need for a HELOC or home equity loan?
Should I use my current rent or the new mortgage payment?
How are student loans in deferment counted?
Sources
- What is a debt-to-income ratio? — Consumer Financial Protection Bureau
- Selling Guide B3-6-02: Debt-to-Income Ratios — Fannie Mae
- Single Family Housing Policy Handbook 4000.1 — U.S. Department of Housing and Urban Development (FHA)
- Regulation Z §1026.43 — ability-to-repay and qualified mortgage standards — Consumer Financial Protection Bureau