Debt-to-Income Ratio
The single number lenders use to decide if you can afford more debt.
What Is Debt-to-Income Ratio (DTI)?
Your debt-to-income ratio (DTI) is the percentage of your gross monthly income that goes toward paying debts. It's calculated by dividing your total monthly debt payments by your gross monthly income (before taxes).
Lenders use DTI as one of the most important factors in loan approval. It tells them whether you can realistically afford to add a new monthly payment on top of your existing obligations.
Front-End vs Back-End DTI
Lenders often look at two versions:
Housing costs only (mortgage/rent, property taxes, homeowner's insurance). Lenders want this below 28%.
All monthly debts — housing + car loans + student loans + credit cards. Lenders want this below 43% (36% for the best rates).
Real Example
Scenario: Sarah earns $6,500/month gross and has the following monthly debt payments:
| Car payment | $450 |
| Student loan | $280 |
| Credit card minimum | $120 |
| Proposed mortgage (PITI) | $1,750 |
| Total monthly debt | $2,600 |
Back-End DTI = $2,600 ÷ $6,500 = 40%
This is under the 43% limit, so Sarah would likely qualify for the mortgage — though she'd get better rates by paying down the car or credit card first to drop below 36%.
DTI Benchmarks
Calculate It Yourself
Find your DTI and see how much mortgage you can afford.