DTI formula
Front-end DTI = Housing payment ÷ Gross monthly income × 100
Back-end DTI = (Housing + All other debt payments) ÷ Gross monthly income × 100
Back-end DTI = (Housing + All other debt payments) ÷ Gross monthly income × 100
Example: You earn $7,000 a month before tax. Your housing payment is $1,900, and you pay $350 on a car, $200 on student loans and $100 in card minimums. Front-end DTI is 1,900 ÷ 7,000 = 27.1%. Back-end DTI is 2,550 ÷ 7,000 = 36.4% — just above the preferred 36% limit but within most lenders’ maximums.
DTI limits by loan type
| Loan type | Typical front-end limit | Typical back-end limit |
|---|---|---|
| Conventional (guideline) | 28% | 36%, up to 45–50% with strong factors |
| FHA | 31% | 43%, higher with compensating factors |
| VA | — | 41% (plus residual income test) |
| USDA | 29% | 41% |
Limits vary by lender and change over time; treat these as typical benchmarks. To see what home price fits within these limits, use the house affordability calculator.
Frequently asked questions
What is a good debt-to-income ratio?
Lenders generally prefer a back-end DTI of 36% or less, with no more than 28% going to housing. Many conventional mortgages allow up to 43–45%, and some programs go to 50% with strong credit or reserves.
What counts as debt in DTI?
Include minimum monthly payments on recurring obligations: mortgage or rent, car loans, student loans, minimum credit card payments, personal loans, and child support or alimony. Do not include utilities, groceries, insurance premiums or phone bills.
Is DTI based on gross or net income?
Gross income — your pay before taxes and deductions. Include salary, regular bonuses, self-employment income (usually averaged over two years), and other stable income you can document.
What is the difference between front-end and back-end DTI?
Front-end DTI includes only housing costs (mortgage principal and interest, property tax, insurance, HOA). Back-end DTI includes housing plus all other monthly debt payments.
How can I lower my DTI quickly?
Pay off small balances entirely to remove their monthly payment, avoid new credit before applying, and consider adding a co-borrower’s income. Refinancing to a longer term also lowers the monthly payment, though it may cost more interest.