How it works
Before approving a mortgage, auto loan or personal loan, lenders check your debt-to-income ratio (DTI): the share of your gross monthly income that already goes to debt payments. The higher it is, the less room you have for a new payment — and the more likely a lower amount, a higher rate or a decline. Knowing your number before you apply lets you fix it first.
DTI = total monthly debt payments ÷ gross monthly income × 100Worked example. Gross income $6,000 a month. Payments: rent or mortgage $1,200, car $450, credit-card minimums $150, student loan $300 — total $2,100. DTI = 2,100 ÷ 6,000 = 35%, in the good range. There is only $60 of room before 36%, and $480 before 43%.
How lenders read your DTI
| DTI | Typical view |
|---|---|
| 36% or less | Good — best approval odds and rates |
| 37–43% | Acceptable — some lenders tighten terms |
| 44–49% | High — new credit is harder to get |
| 50% or more | Very high — half your income goes to debt |
For US mortgages, 43% has long been a key benchmark, and many conventional loans prefer 36% or less, with no more than about 28% going to housing (the “28/36 rule”). Programmes such as FHA can allow higher ratios with strong compensating factors. Outside the US, central banks often set their own caps on loan payments as a share of salary. Always ask your lender which limit applies today.
Front-end vs back-end DTI
- Front-end (housing) ratio: housing costs only — mortgage principal and interest, property tax, insurance and HOA dues.
- Back-end ratio: housing plus every other debt payment. This calculator shows the back-end ratio, the one most lenders focus on.
What counts
- Included: mortgage or rent, auto loans, student loans, personal loans, credit-card minimum payments, buy-now-pay-later plans, child support and alimony.
- Usually excluded: utilities, phone, groceries, transport, insurance premiums (other than those in your mortgage payment).
- Income: gross (pre-tax) monthly income from stable, documented sources.
How to lower your DTI
- Pay down credit cards first — they carry the highest rates. The credit card payoff calculator shows how fast.
- Avoid new credit before a big application.
- Refinance to a longer term to cut the payment (you will pay more interest overall).
- Add documented income, such as a co-borrower.
Estimate a new mortgage payment with the mortgage calculator or a car payment with the auto loan calculator, then add it to see your DTI after the loan.