Debt-to-Income Ratio for a Mortgage
Your DTI is the back half of every mortgage decision. Here is how to calculate it exactly like an underwriter, the limits for each loan program, and the fastest ways to lower it.
Divide total minimum monthly debt payments by gross monthly income. Conventional loans generally cap DTI at 45 to 50 percent, FHA near 43 to 57 percent with factors, VA at 41 percent guideline, USDA at 41 percent. Paying off installment debt is the fastest way to lower it.
How underwriters calculate DTI
Add minimum payments: the proposed housing payment (PITI plus HOA and PMI), car loans, student loans, credit card minimums, personal loans, and child support. Divide by gross monthly income before taxes.
They use minimums, not balances: a $10,000 card balance with a $200 minimum counts as $200. Student loans in deferment get special rules, often a percentage of the balance. Authorized-user accounts can sometimes be excluded with documentation.
Limits by loan program
Conventional: up to 45 percent standard, up to 50 with strong compensating factors through automated underwriting. FHA: 31/43 standard, up to about 46.99/56.99 with factors like reserves or residual income. VA: 41 percent guideline, flexible above it with residual income. USDA: 41 percent with limited exceptions.
These are guidelines, not laws of physics. Automated underwriting weighs credit score, reserves, and loan-to-value alongside DTI, so a 780 score with six months of reserves can clear ratios that would sink a thinner file.
Fastest ways to lower DTI
Pay off the smallest installment loan entirely: the whole minimum payment disappears from the ratio. A $350 car payment eliminated on $8,000 income drops DTI by over 4 points instantly.
Do not close old credit cards before applying; that can hurt your score. Do not open new credit either. And time it right: pay debts down, then let statements cycle so the lower minimums report before you apply.
Skip the arithmetic
See how your debts cap your price with the free home affordability calculator.
DTI questions
What DTI is too high for a mortgage?
Most qualified mortgages cap near 43 percent, with agency programs stretching higher for strong files. But approval is not comfort: at 45 percent DTI plus taxes, over half your take-home can go to debt. Many buyers self-cap near 36 to 40 percent for breathing room.
Does my mortgage payment count in DTI?
DTI is calculated with the new housing payment included, which is exactly why the ratio determines your max price. Front-end DTI is housing alone over income; back-end adds all other debts. Lenders check both.