What debt-to-income ratio do most lenders prefer?

Most lenders prefer a back-end DTI ratio below 36-43%. The front-end DTI (housing only) should be below 28%. However, many lenders will go up to 50% back-end DTI with compensating factors like excellent credit scores, significant savings, or strong employment history. FHA loans typically allow up to 50% back-end DTI. VA loans may allow up to 60% in some cases.

What counts as debt in my DTI calculation?

Debt includes: mortgage or rent payments, car loans, student loans, credit card minimum payments (or 2-5% of balance if higher), personal loans, medical debt, child support, alimony, and other recurring monthly obligations. It does NOT include utilities, insurance, groceries, or other living expenses that aren't recurring debt payments.

Can I get approved with a high DTI?

Yes, many lenders will approve loans with DTI ratios above 43% if you have compensating factors such as: excellent credit score (740+), significant cash reserves (6+ months of payments), stable employment history (2+ years), low housing cost ratio, or significant assets. Non-QM lenders may go even higher with additional documentation.

How does DTI affect my mortgage approval and interest rate?

DTI is a key factor in mortgage approval. A lower DTI (below 36%) typically results in faster approvals and potentially better interest rates. Higher DTI ratios (43-50%) may result in higher interest rates, additional documentation requirements, or approval conditions. Some lenders won't approve above 50% DTI regardless of other factors.

How can I improve my DTI ratio?

You can improve your DTI by: (1) Paying down existing debt, especially credit cards and personal loans, (2) Increasing your income through a raise, bonus, or second job, (3) Paying off loans to reduce monthly obligations, (4) Avoiding new debt before applying for a mortgage. Even reducing your credit card balance by half can significantly improve your DTI ratio.

Debt-to-Income (DTI) Ratio Calculator

Calculate your debt-to-income ratio and understand your mortgage eligibility. See how lenders evaluate your borrowing capacity.

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Understand Your Borrowing Power

Your debt-to-income ratio is one of the most important factors lenders use to determine how much you can borrow. Our calculator shows your front-end DTI (housing costs only) and back-end DTI (all debts), plus where you stand compared to lender standards.

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DTI Ratio Calculator

Enter your monthly income and debt payments to calculate your debt-to-income ratio.

Quick Answer

Your debt-to-income (DTI) ratio shows what percentage of your gross monthly income goes toward debt payments. Lenders typically prefer front-end DTI below 28% (housing only) and back-end DTI below 36-43% (all debts). Use this calculator to see where you stand and what adjustments might improve your mortgage eligibility.

Monthly Gross Income

Gross Monthly Income (before taxes)

Monthly Debt Obligations

Housing Payment (mortgage, rent, or future mortgage estimate)

Car Loans (monthly payment)

Student Loans (monthly payment)

Credit Cards (minimum payment or 5% of balance if higher)

Other Debts (personal loans, medical, child support, etc.)

Rate Assumption: Displayed rates assume a 740+ credit score. Your rate may vary based on your credit profile and loan details.

Front-End DTI (Housing Ratio)

0.00%

Housing Payment: $0.00 / $6,000.00

Lenders typically prefer below 28%

Back-End DTI (Total Debt Ratio)

0.00%

Total Monthly Debts: $0.00 / $6,000.00

Lenders typically prefer 36-43%

Key Insights

Monthly Gross Income:$6,000.00

Total Monthly Debts:$0.00

Available for 43% DTI:$2,580.00

Room in Budget (43% max):$0.00

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Understanding Your Debt-to-Income Ratio

Front-End DTI

Also called the "housing ratio," this shows what percentage of your gross income goes to housing costs (mortgage payment, property taxes, insurance, HOA fees).

Formula:

Housing Payment ÷ Gross Monthly Income × 100

Target:

Below 28% is ideal

Back-End DTI

The "debt-to-income ratio" used by most lenders, showing the percentage of gross income that goes to ALL monthly debt obligations.

Formula:

Total Monthly Debts ÷ Gross Monthly Income × 100

Target:

36-43% (varies by lender)

Typical Lender DTI Guidelines

Conventional Loans

•Front-end: 28% or less
•Back-end: 36% (up to 43-50% with compensating factors)
•May have stricter requirements

FHA & Non-Qualifying Loans

•Front-end: 31% or less
•Back-end: 43-50%
•More flexible with documentation

How to Improve Your DTI Ratio

💳

Pay Down Credit Card Debt

Reduce credit card balances to lower your minimum payments. Even paying off 50% of your balance can significantly improve your DTI.

💰

Increase Your Income

A raise, bonus, second job, or overtime increases your gross income and lowers your DTI percentage. Bonus income needs 2-year average documentation.

🚗

Pay Off Existing Loans

Paying off car loans, personal loans, or other debts removes them from your DTI calculation, freeing up borrowing capacity.

⏳

Wait for Debts to Fall Off

Paid-off debts no longer count. As student loans near payoff or credit card balances decrease, your DTI improves automatically.

Related resources

Debt-to-Income Ratio FAQ

Disclaimer

This DTI calculator is for educational purposes only and provides estimates based on the information you enter. Actual debt-to-income calculations may vary based on how your specific lender counts income and debts. Some lenders may include taxes, insurance, and other factors differently. Results do not constitute a pre-approval or loan offer. For accurate DTI assessment and mortgage approval, contact a licensed California mortgage professional. Your actual eligibility depends on credit score, income verification, assets, employment history, and other factors.

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