The ratio lenders look at first: how much of your monthly income goes to the new house payment and your other debts.
How it works
Back-end DTI = (housing payment + other monthly debts) ÷ gross monthly income
Front-end DTI uses the housing payment alone. Lenders count the minimum required payment on each debt, not what you choose to pay.
Keep in mind
- Utilities, phone bills, insurance premiums and groceries are not debts for this purpose.
- The program figures are guideline limits; automated underwriting can approve higher with strong compensating factors.
Questions
What is a good debt-to-income ratio for a mortgage?
Under 36% leaves plenty of room. Conventional loans often go up to about 45%, FHA to 43% as a standard with more allowed for strong files, and USDA to 41% total with 29% for housing. VA uses 41% as a guideline and also checks residual income.
Does rent count in my debt-to-income ratio?
Not when you are buying: the new housing payment replaces your rent. Rent can matter as proof of on-time payments. See also: Rent vs buy calculator.
Related guides
- FHA loans
- Conventional loans
- VA loans
- USDA loans
- DSCR vs conventional investment loans
- FHA vs conventional loans
- FHA vs VA loans
- USDA vs FHA loans
- Pre-qualification vs pre-approval
