What Is DTI Ratio?
DTI = (Total Monthly Debt Payments / Gross Monthly Income) × 100. It measures how much of your income goes toward debt each month. Lenders use it to assess whether you can afford additional borrowing.
Front-End vs Back-End DTI
Lenders actually look at two DTI numbers:
Front-End DTI (Housing Ratio)
Only housing costs: mortgage principal + interest + property tax + insurance (PITI).
Target: 28% or less
Back-End DTI (Total DTI)
All debt: housing + car loans + credit cards + student loans + child support.
Target: 36% or less (43% max for most loans)
DTI Guidelines by Loan Type
| Loan Type | Max DTI | Preferred DTI |
|---|---|---|
| Conventional | 45% | 36% |
| FHA | 50% | 43% |
| VA | 41% | 36% |
| USDA | 41% | 36% |
How to Lower Your DTI
- Pay down credit card balances: Minimum payments drop as balances decrease
- Don't take on new debt: Avoid new car loans or credit cards before applying for a mortgage
- Increase your income: Overtime, side gig, or a raise directly lowers the ratio
- Pay off small loans entirely: Eliminates the monthly payment completely
- Wait for student loan forgiveness: Some programs reduce monthly payments after a set period
Calculate Your DTI
Use our Loan Calculator to see how a new loan affects your monthly payments, our Mortgage Calculator to estimate housing costs, and our Budget Calculator to plan your debt payoff strategy.