Definition
Debt-to-income ratio (DTI)
Debt-to-income ratio (DTI) is the share of a borrower's gross monthly income that goes to monthly debt payments. Lenders look at a housing-only version (front-end) and a total version (back-end). It is one of the main tests of whether a mortgage payment is affordable on paper.
DTI is a simple division: monthly debt payments divided by gross monthly income, shown as a percentage. Gross means before taxes and deductions, which surprises borrowers who budget from take-home pay.
What counts as debt is specific. Lenders include the proposed housing payment (principal, interest, taxes, insurance, mortgage insurance and HOA dues) plus minimum payments on car loans, student loans, credit cards, personal loans, child support and similar obligations. Utilities, groceries, phone bills and insurance on a car are usually not counted.
Worked example. Gross income is $6,000 a month. The proposed housing payment is $1,700, a car loan is $400 and card minimums total $100. The front-end ratio is $1,700 / $6,000, about 28%. The back-end ratio is $2,200 / $6,000, about 37%.
A back-end ceiling of 43% is a widely cited guideline that the CFPB references, not a legal cap; actual limits depend on the program, the automated underwriting result and compensating factors. Some programs accept higher ratios for strong files, and some lenders set tighter overlays. Because the housing payment is in the numerator, every change in price, rate, taxes or insurance moves DTI, which is why it is the hinge of most affordability math. The debt-to-income calculator shows both ratios side by side.
Calculators that use this term
FAQ · 3 questions
Questions about Debt-to-income ratio (DTI)
Is DTI calculated on gross or net income?
On gross monthly income, before taxes, retirement contributions and health premiums. Using take-home pay makes the ratio look worse than the one a lender will calculate.
Do utilities and phone bills count in my DTI?
Generally no. DTI counts debts that appear on a credit report or court order, plus the housing payment. Everyday living costs are left out, which is why a ratio can look fine while a budget still feels tight.
What is a good debt-to-income ratio for a mortgage?
Lower is better, and many lenders are comfortable when the total ratio sits at or below about 43%. Some programs go higher with strong credit or reserves, so the real limit depends on the loan and the lender.
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