Debt-to-Income Ratio Explained
Last updated: August 2026
What Is DTI?
Your debt-to-income (DTI) ratio compares your monthly debt payments to your gross monthly income. Lenders use it to gauge how much additional debt you can handle. It's one of the most important numbers on any loan application.
Front-End vs. Back-End DTI
- Front-end DTI: Only your housing costs (rent or mortgage payment) divided by gross income. Some lenders also include property tax, insurance, HOA, and PMI in this number.
- Back-end DTI: All monthly debt payments — housing, car loans, credit cards, student loans, personal loans, child support — divided by gross income. This is the number most lenders focus on.
What's a Good DTI?
| DTI | What It Means |
|---|---|
| 36% or less | Excellent. Most lenders see you as a low-risk borrower. |
| 37%–43% | Moderate. You may still qualify, possibly with less favorable terms. |
| 44%–49% | High. Options become limited; lenders may require compensating factors. |
| 50% or more | Very high. Qualifying for most conventional loans is unlikely. |
Source: CFPB. Thresholds are general guidelines; individual lenders may differ.
How to Lower Your DTI
- Pay off or pay down credit cards and personal loans.
- Avoid taking on new debt before applying.
- Increase your income — a second job, freelance work, or a raise all help.
- Consider a less expensive home to reduce the proposed housing payment.
- Refinance existing loans to lower monthly payments (extending the term may increase total interest).
Calculate your DTI: DTI Ratio Calculator.
This guide is for informational purposes only. Consult a mortgage professional for personalized advice.