Debt-to-Income (DTI) Ratio Guidelines
Your debt-to-income (DTI) ratio is your total monthly debt payments divided by your gross monthly income. The classic 28/36 rule keeps housing under 28% of gross income and all debt under 36% — but most lenders go higher, to 43–50% depending on the loan.
Below are the DTI limits by loan type, how to calculate yours, what a good ratio is, and which debts count.
How to calculate your DTI
Add up your required monthly debt payments — mortgage or rent, car loans, student loans, minimum credit-card payments, child support — and divide by your gross (pre-tax) monthly income. Lenders look at two versions: the front-end ratio (housing only) and the back-end ratio (all debt).
Example: $2,000 of monthly debt on $6,000 of gross income is a 33% DTI ($2,000 ÷ $6,000). Check yours with the debt-to-income ratio calculator.
Maximum DTI by loan type
These are back-end (total-debt) ceilings. Lenders exceed them with "compensating factors" — strong credit, cash reserves or a big down payment.
| Loan type | Typical max DTI |
|---|---|
| Conventional | ~45% (up to 50% with strong credit/reserves) |
| FHA | 43% (up to ~57% with compensating factors) |
| VA | ~41% guideline (flexible with residual income) |
| USDA | ~41–44% |
| Qualified Mortgage guideline | 43% |
What is a good DTI?
36% or below is strong and unlocks the best rates. 36–43% is acceptable to most lenders. 43–50% is stretched — fewer lenders, tighter terms. Above 50% is hard to qualify for. Lowering your DTI (paying down a card or car loan) can both qualify you and earn a better rate.
What counts as debt
Counts: mortgage or rent, car loans, student loans, minimum credit-card payments, personal loans, and court-ordered child support or alimony. Doesn't count: utilities, groceries, insurance, taxes, phone and streaming subscriptions — DTI only measures debt obligations, not living expenses.
How to lower your DTI
Three levers move the ratio before you apply:
- Pay down balances — clearing a card or a car loan removes its entire monthly payment from the calculation, which usually helps more than chipping at several debts.
- Raise income — a raise, side income or adding a co-borrower lifts the denominator.
- Avoid new debt — don't open cards or finance a car in the months before applying, and consider consolidating high-rate debt into one lower payment.
What is a good debt-to-income ratio?
A back-end DTI of 36% or less is ideal and earns the best rates. Many lenders approve up to 43%, and some up to 50% with strong credit or cash reserves. Above 50% is hard to qualify for.
What is the 28/36 rule?
It says you should spend no more than 28% of gross monthly income on housing (the front-end ratio) and no more than 36% on all debt payments (the back-end ratio). It is a conservative benchmark; lenders often allow more.
How do I calculate my debt-to-income ratio?
Divide your total required monthly debt payments by your gross monthly income. For example, $2,000 of debt on $6,000 of income is a 33% DTI. Lenders focus on this back-end figure.
What is the maximum DTI for a mortgage?
It depends on the loan: conventional up to about 45–50%, FHA up to 43% (or ~57% with compensating factors), and VA around 41% but flexible with strong residual income.
What debts are included in DTI?
Housing, car loans, student loans, minimum credit-card payments, personal loans and child support or alimony. Utilities, groceries, insurance and subscriptions are not counted.
How can I lower my debt-to-income ratio?
Pay down loan and card balances to remove their monthly payments, increase your income, and avoid taking on new debt before you apply. Paying off a small loan entirely often helps more than reducing several balances a little.
How do lenders count student loans in DTI?
Even deferred student loans count. If your credit report shows a $0 payment, lenders such as Fannie Mae use 1% of the balance as the monthly figure — so an income-driven payment below that can sometimes lower your DTI.