What is the debt-to-income ratio?
The debt-to-income (DTI) ratio compares how much you owe every month with how much you earn before tax. Lenders use it to judge whether you can take on a new loan, especially a mortgage. The lower your DTI, the more room you have in your budget and the better your chances of approval.
Enter all your incomes and debts with their period (yearly or monthly). The DTI calculator converts everything to monthly amounts and shows your front-end and back-end ratios, how your income is split and roughly how much house you could afford if you stopped paying your current rent and mortgage. For a full estimate with your own rate, down payment and taxes, use the house affordability calculator.
How to calculate your debt-to-income ratio
DTI = total monthly debt payments / gross monthly income × 100
- Add up your monthly debt payments: rent or mortgage, property tax, HOA fees, homeowners insurance, minimum credit card payments, and student, auto and personal loans. Divide yearly amounts by 12.
- Add up your gross monthly income — what you earn before taxes and deductions.
- Divide the debts by the income and multiply by 100.
Example: with a gross income of $6,000 a month, $1,500 of housing costs and $600 of other debts, the front-end ratio is 1,500 / 6,000 = 25% and the back-end ratio is 2,100 / 6,000 = 35%.
Front-end vs back-end DTI
- Front-end DTI (housing ratio) counts only housing costs: rent or mortgage, property tax, HOA fees and homeowner insurance.
- Back-end DTI adds all other debt payments: credit cards, student and auto loans and other liabilities.
When people talk about "your DTI", they usually mean the back-end ratio, and it is the one most lenders weigh most.
What counts as debt — and what does not
DTI includes only payments you are obliged to make: housing, minimum payments on credit cards, loan payments, and court-ordered payments such as child support or alimony. Everyday spending is not counted, even though it is part of your budget: groceries, utilities, phone and internet, car and health insurance, and income taxes. Use the minimum payment on a credit card, not the full balance.
What is a good DTI?
- 35% or less — healthy. You likely have money left for saving and unexpected costs.
- 36% to 49% — manageable, but there is room to improve. Lenders may ask for more information.
- 50% or more — very stressful. Half your income goes to debt, which leaves little for anything else.
DTI limits for a mortgage by loan type
| Loan type | Front-end | Back-end |
|---|---|---|
| Conventional | About 28% | 36%, up to 45–50% |
| FHA | 31% | 43%, up to about 57% |
| VA | None | 41% guideline |
| USDA | 29% | 41% |
- Conventional and FHA loans allow the higher ratios only with automated underwriting approval and strong credit or savings.
- VA loans look at residual income first; a ratio above 41% gets a closer review but is not ruled out.
- USDA loans allow a little room above the limits for a strong application.
These are program guidelines; individual lenders can be stricter. The FHA loan calculator and the VA mortgage calculator show the payment on those loans.
Maximum monthly debt by income
The table shows how much you can pay toward all debts each month, housing included, at a 36% and a 43% back-end ratio.
| Annual income | Monthly income | Debts at 36% | Debts at 43% |
|---|---|---|---|
| $40,000 | $3,333 | $1,200 | $1,433 |
| $60,000 | $5,000 | $1,800 | $2,150 |
| $80,000 | $6,667 | $2,400 | $2,867 |
| $100,000 | $8,333 | $3,000 | $3,583 |
| $150,000 | $12,500 | $4,500 | $5,375 |
Renting? The same rule tells you how much rent fits your budget — see the rent calculator.
How to lower your DTI
- pay down balances, starting with high-interest debt — the debt payoff calculator builds a plan;
- combine several debts into one loan with a lower payment — check the numbers with the debt consolidation calculator;
- clear credit card balances, which also helps your credit score — see the credit cards payoff calculator;
- avoid new loans and credit card spending before applying for a mortgage;
- increase your income with a raise, side work or a co-borrower.