How to use the Debt-to-Income Ratio
- Enter gross monthly income — before tax, and including reliable bonus or self-employment income.
- Enter the full housing payment: principal, interest, property tax, insurance and any HOA dues.
- Add every other required monthly payment: car loans, student loans, minimum card payments, child support.
- Read the back-end ratio, which is the number underwriters focus on.
- Use the capacity lines to see how much housing payment or extra debt fits inside 36% and 43%.
How the calculation works
The front-end ratio counts only housing costs and the back-end ratio counts all recurring debt. Both use gross rather than net income, which is why the ratios always look more comfortable on paper than they feel in a bank account — a 43% back-end ratio can easily be 60% of take-home pay once tax and payroll deductions come out.
The thresholds come from underwriting standards, not arithmetic. The classic 28/36 rule predates automated underwriting. The 43% back-end limit was written into the Qualified Mortgage rule, and although the 2021 revision replaced the hard cap with a price-based test, most lenders still treat 43% as the practical ceiling. FHA loans regularly approve to 50% and above with compensating factors such as reserves or a high credit score.
What counts as debt matters as much as the ratio. Underwriters include minimum card payments, instalment loans with more than about ten months remaining, alimony and child support, but not utilities, insurance premiums, taxes withheld or groceries. Paying off a small loan with three payments left barely helps; eliminating a car payment with three years left can move the ratio several points and change the approval outcome.
Front-end DTI = housing payment ÷ gross monthly income; Back-end DTI = (housing + other debt) ÷ gross monthly incomeSource: CFPB Ability-to-Repay/Qualified Mortgage rule, 12 CFR §1026.43; Fannie Mae Selling Guide B3-6-02 debt-to-income ratios.
Worked example
$7,000 gross monthly income, a $1,900 housing payment and $650 of other debt.
- Front-end = 1,900 ÷ 7,000 = 27.1%.
- Back-end = (1,900 + 650) ÷ 7,000 = 36.4%.
- Capacity at 43% = 7,000 × 0.43 = $3,010, leaving $460 of unused room.
- Max housing at 36% with the same other debt = 7,000 × 0.36 − 650 = $1,870.
36.4% back-end sits comfortably inside conventional guidelines with about $460 a month of additional debt capacity.
Frequently asked questions
What DTI do I need for a mortgage?+
Under 36% is comfortable, up to 43% qualifies with most conventional lenders, and FHA loans can go to 50% or higher with strong compensating factors.
Gross or net income?+
Always gross — income before taxes and deductions. That is what lenders use, which is why the ratio understates the pressure on your actual budget.
Do utilities and groceries count?+
No. Only recurring debt obligations that appear on a credit report, plus court-ordered payments such as alimony or child support.
What is the fastest way to lower DTI?+
Eliminate the largest monthly payment rather than the largest balance. A car loan with a big payment and small balance is the highest-leverage target.
Last reviewed September 1, 2026. We review this page whenever the underlying formula, tax year, published rate or standard changes.