Finance · 4 min read
Understanding Debt-to-Income (DTI)
What DTI is, the front-end and back-end ratios, and why lenders care so much about it for a mortgage.
Try the debt-to-income calculatorPut these numbers to workOpen →Debt-to-income ratio (DTI) compares how much you owe each month to how much you earn. Lenders use it as a quick read on whether you can comfortably take on a new payment — it's one of the biggest factors in a mortgage decision.
Two ratios
Front-end DTI = housing payment ÷ gross monthly income. Back-end DTI = (housing + all other debt payments) ÷ gross monthly income.
“Gross” means before tax. Debt payments include mortgage or rent, car loans, student loans, and minimum credit-card payments — but usually not things like utilities or groceries.
What counts as a good DTI
- •36% or below — healthy; lenders see plenty of room.
- •37–43% — manageable; still within many lenders' limits.
- •Above 43% — high; it gets harder to qualify for a mortgage.
How to improve it
- •Pay down the balances with the highest monthly minimums.
- •Avoid taking on new loans before applying for a mortgage.
- •Increase income where you can — it's the denominator.
- 1Enter your gross monthly income.
- 2Add your housing payment and other monthly debts.
- 3Read your front-end and back-end DTI and where you land.