What is a debt-to-income ratio?
Your DTI ratio is the percentage of your gross monthly income that goes toward paying debts. Lenders use it to assess how much additional debt you can handle. A lower DTI shows lenders you have a healthy balance between income and debt.
Front-end vs. back-end DTI
The front-end ratio (or housing ratio) includes only your housing costs — mortgage principal and interest, property taxes, homeowners insurance, and HOA fees. Most lenders want this below 28%. The back-end ratio includes all monthly debt obligations. Most lenders want this below 36–45%.
How to lower your DTI
The fastest ways are to pay off smaller debts entirely (which removes their monthly payment from your DTI), avoid taking on new debt before applying, or increase your income. You can also choose a less expensive home to reduce your housing payment. Our debt payoff calculator can help you prioritize which debts to eliminate first.
DTI and mortgage qualification
Your DTI is one of the most important factors in mortgage approval. Use this alongside our mortgage calculator and affordability calculator to find a home price that keeps your DTI in lender-friendly territory.