Mortgage DTI Ratio Calculator
Calculate your Front-End and Back-End Debt-to-Income Ratios for mortgage qualification.
Proposed Housing Costs
Other Monthly Debt Obligations
Your DTI Ratios
Understanding Your Debt-to-Income (DTI) Ratio for Mortgage Approval
When lenders evaluate your application for a mortgage, one of the most critical metrics they analyze is your Debt-to-Income (DTI) ratio. Your credit score tells them your history of paying debts, but your DTI tells them if you can afford to take on new debt. This calculator helps you estimate where you stand before you apply.
What is DTI?
Your Debt-to-Income ratio is a percentage that represents how much of your gross monthly income (income before taxes) goes toward paying recurring debt obligations. Lenders use it to assess the risk of lending to you. A lower DTI generally signifies a better balance between income and debt, suggesting you have sufficient cash flow to handle mortgage payments.
The Two Types of DTI Ratios
Lenders typically look at two distinct ratios:
- Front-End Ratio (Housing Ratio): This calculates the percentage of your gross income that would go specifically toward your proposed housing costs. This includes the mortgage principal, interest, property taxes, homeowners insurance, and any HOA dues.
- Back-End Ratio (Total Debt Ratio): This is the more comprehensive number. It includes your proposed housing costs plus all other recurring monthly debt payments, such as car loans, student loans, and credit card minimums.
What Counts as "Debt" for DTI?
It's important to know what lenders include in this calculation. They are looking for fixed, recurring obligations.
- Included: Minimum credit card payments, auto loans/leases, student loans, personal loans, alimony, and child support payments.
- Excluded: Living expenses such as groceries, utilities (electricity, water), phone bills, cable/internet, car insurance, and healthcare costs.
Typical Lender Guidelines and the "28/36 Rule"
While requirements vary by loan type (Conventional, FHA, VA) and lender, a common benchmark for conventional loans is the "28/36 rule."
- Front-End: No more than 28%. Your housing costs shouldn't exceed 28% of your gross income.
- Back-End: No more than 36%. Your total debt load shouldn't exceed 36% of your gross income.
However, in today's market, many lenders allow higher ratios. For qualified mortgages, a back-end DTI up to 43% is often acceptable. Some government-backed loans (like FHA) or borrowers with high credit scores and significant cash reserves may get approved with DTIs even higher than 43%, sometimes nearing 50%.
Example Calculation
Let's look at an example scenario to see how the math works.
- Gross Monthly Income: $7,500
- Proposed Mortgage PITI+HOA: $2,100
- Auto Loan: $450
- Student Loans: $300
- Credit Card Minimums: $150
Total Non-Housing Debt: $450 + $300 + $150 = $900
Total Monthly Obligations: $2,100 (Mortgage) + $900 (Other) = $3,000
- Front-End Ratio: ($2,100 / $7,500) = 28.00%
- Back-End Ratio: ($3,000 / $7,500) = 40.00%
In this scenario, the borrower meets the conservative front-end guideline and is within the acceptable range (under 43%) for the back-end ratio for most conventional loans.
How to Improve Your DTI Ratio
If your DTI is too high, you have two main levers to pull to improve your chances of approval:
- Reduce Debt: Pay off smaller loan balances completely to eliminate that monthly payment obligation. Paying down credit cards to lower minimum payments also helps.
- Increase Income: A higher salary, a second job, or verifiable bonus/commission income can lower your ratio.
- Lower the Proposed Housing Cost: You may need to look at less expensive homes or increase your down payment to lower the monthly mortgage obligation.