Debt-to-Income Ratio for a Mortgage: How It's Calculated and What's Good
Lenders prefer total debt at 36% of gross income or less, and many allow up to 43%. How front-end and back-end DTI work, a worked example, and how to lower yours before you apply.
By the MoneyBackKit team · Updated October 27, 2026 · 5 min read
When you apply for a mortgage, the lender looks closely at one number: your debt-to-income ratio (DTI), the share of your gross monthly income that goes to debt payments. It decides how big a loan you can get, and sometimes whether you're approved at all. Here's how it's calculated and what counts as good.
How DTI is calculated
- Front-end (housing) ratio: your new housing payment (principal, interest, property tax, insurance, HOA, PMI) ÷ gross monthly income.
- Back-end (total) ratio: housing payment + all other monthly debt payments (car, student loans, minimum card payments, personal loans, child support) ÷ gross monthly income.
- Gross income means before tax. Everyday bills like groceries, phone and utilities don't count as debt.
An example
| Monthly | Amount |
|---|---|
| Gross income | $6,500 |
| New housing payment | $1,900 |
| Car loan | $450 |
| Student loan | $300 |
| Credit card minimums | $150 |
| Front-end ratio | 29.2% |
| Back-end ratio | 43.1% |
With a back-end ratio of 43.1%, this borrower is above the 36% many lenders like, but under the 43% used by many conventional loan guidelines. Paying off the car would drop it to 36.2%.
What lenders look for
| Back-end DTI | What it usually means |
|---|---|
| 36% or less | Strong. Easier approval and better terms. |
| 37–43% | Often approved, especially with good credit and savings. |
| 44–50% | Possible with some loan types (for example FHA) and strong other factors. |
| Over 50% | Hard to get approved for most mortgages. |
How much house that allows
On $6,500 a month with these other debts ($900), keeping total debt at 36% leaves room for a housing payment of about $1,440; at 43%, about $1,895. If roughly a quarter of the housing payment goes to tax and insurance, that's a loan of very roughly $166,513 to $219,126 at 6.75% for 30 years.
Ways to lower your DTI before you apply
- Pay off a small loan completely (a whole monthly payment disappears), rather than paying a bit off several.
- Pay down credit cards: lower balances mean lower minimum payments.
- Avoid new car loans or financing purchases in the months before you apply.
- Add a co-borrower's income if someone will share the loan, or include all regular income you can document.