What DTI do I need to buy a house?

Most conventional mortgage lenders want a back-end DTI of 43% or below. FHA loans allow up to 50% DTI in some cases. To get the best mortgage rates and easiest approval, aim for below 36%. Your front-end ratio (housing costs only) should ideally be below 28%.

Does DTI include all debt?

DTI includes all recurring monthly debt payments: mortgage or rent, car loans, student loans, credit card minimum payments, personal loans, and any other installment debt. It does NOT include utilities, insurance, groceries, or other living expenses — only debt payments.

How do I lower my DTI quickly before applying for a mortgage?

The fastest strategies are paying off small loans entirely (eliminating the monthly payment) and avoiding any new credit applications. Don't lease a new car or take on any new installment debt in the 6 months before applying for a mortgage. Even eliminating a $200/month payment can move your DTI by 3 percentage points if your income is $6,000/month.

What Is a Good Debt-to-Income Ratio? (DTI Guide)

How to Calculate Debt-to-Income Ratio

Your debt-to-income (DTI) ratio is calculated by dividing your total monthly debt payments by your gross (pre-tax) monthly income, then multiplying by 100 to get a percentage.

DTI = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100

Example: If your gross monthly income is $6,000 and your monthly debt payments total $1,800 (mortgage $1,200 + car loan $350 + student loan $250), your DTI is 1,800 ÷ 6,000 = 30%.

Front-End vs Back-End DTI

Mortgage lenders use two DTI calculations:

Front-end DTI (housing ratio): Only your housing costs (principal, interest, taxes, insurance, and HOA) divided by gross income. Lenders generally want this below 28%.
Back-end DTI (total DTI): All monthly debt obligations divided by gross income. This is the number most people mean when they say "DTI." Lenders generally want this below 36–43%.

The 43% Rule and Mortgage Approval

The Consumer Financial Protection Bureau's Qualified Mortgage rule traditionally capped back-end DTI at 43% for conventional loans. In practice, Fannie Mae and Freddie Mac often allow DTIs up to 45–50% with compensating factors (high credit score, large down payment, significant reserves).

Excellent (below 36%): Strong mortgage approval odds, best rates
Good (36–43%): Likely to be approved, may face some scrutiny
Borderline (43–50%): May qualify with compensating factors, not ideal
Too high (above 50%): Most conventional lenders will decline

How to Improve Your DTI

DTI can only be improved two ways: reduce debt payments or increase income. The fastest strategies:

Pay off small loans entirely to eliminate monthly payments
Avoid taking on new debt in the months before applying for a mortgage
Increase gross income by adding part-time work or a side business
Refinance to lower monthly payments (though this may extend repayment)
Pay down credit card balances — minimum payments on revolving debt count toward DTI

DTI vs Credit Score

Your DTI and credit score are separate metrics. You can have a high credit score and a high DTI, or vice versa. Both matter for mortgage approval, but they measure different things. Your credit score reflects your history of paying debts on time; your DTI reflects how much of your income is consumed by debt payments. Lenders look at both together to assess risk.