How to Calculate Your Debt-to-Income Ratio (And Why It Matters)

Your debt-to-income ratio is your total monthly debt payments divided by your gross monthly income, expressed as a percentage. If you earn $6,000 per month gross and your monthly debt payments total $2,100, your DTI is 35% ($2,100 / $6,000). Lenders use this single number more than almost any other metric to determine how much they will lend you and at what rate.

What counts as debt for DTI: mortgage or rent payment, car loans, student loan minimum payments, credit card minimum payments, personal loans, child support, and any other recurring debt obligation. What does NOT count: utilities, groceries, phone bills, insurance premiums (unless required by lender), subscriptions, or discretionary spending.

The two types of DTI. Front-end (housing only): your total housing cost divided by gross income. Most lenders want this under 28%. Back-end (all debt): total debt payments divided by gross income. Most conventional lenders want this under 36%, with an absolute maximum of 43 to 45%. FHA allows up to 50% in some cases.

What your DTI means for borrowing. Under 20%: excellent — best rates, approved everywhere. 20-35%: good — approved for most loans at competitive rates. 36-43%: caution — approved but may face higher rates. 43-50%: problematic — denied by most conventional lenders, may qualify for FHA. Over 50%: you are in financial distress.

To lower your DTI: pay off smallest debts entirely (eliminating a $200/month car payment drops DTI significantly), refinance to lower rates (reduces minimum payments), increase income, or avoid taking on new debt before applying for a mortgage. Use the [affordability calculator](/calculators/can-i-afford) to see your DTI and the [debt payoff calculator](/calculators/debt-payoff) to plan debt reduction. For more on how DTI affects home buying, see our [affordability guides](/blog/can-i-afford-400k-house-80k-salary).

Frequently Asked Questions:

Does rent count in DTI? For mortgage applications, your current rent is NOT counted — the new proposed mortgage payment replaces it.

Can I get a mortgage with 45% DTI? FHA loans may approve up to 50% DTI in some cases. Conventional loans typically cap at 43-45%.