Quick Answer
Lenders add up your monthly debts, including credit cards, car loans, and your future mortgage payment, then divide by your gross monthly income to get your DTI. A lower ratio generally makes it easier to qualify and can affect your rate during underwriting.
- What it measures
- Monthly debt payments divided by gross income
- Includes
- Proposed mortgage payment plus other recurring debts
- General guideline
- Lower ratios generally qualify more easily
- Loan program limits
- Vary by loan type, so check with your lender
How DTI Is Calculated
Lenders total your recurring monthly debt payments, credit cards, auto loans, student loans, and the proposed housing payment, then divide that figure by your gross monthly income before taxes. The result is expressed as a percentage and often broken into a front-end ratio, housing costs only, and a back-end ratio that combines all debts.
Your DTI is one of several factors lenders weigh alongside credit score, down payment, and cash reserves when they evaluate your loan-to-value ratio and overall application.
Ways to Improve Your DTI
Paying down revolving debt, avoiding new loans before applying, and, where possible, increasing documented income can all help lower your DTI before you apply. Some buyers also choose a lower purchase price specifically to keep their ratio comfortably within their loan program's limits.
Our agents often coordinate with a buyer's lender early in the process so pricing expectations line up with what a comfortable DTI actually supports.
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Frequently Asked Questions — Debt-to-income ratio (DTI)
What DTI do I need to qualify for a mortgage?
Limits vary by loan program and lender, so it's best to confirm your specific threshold with a lender during pre-approval.
Does DTI include my proposed mortgage payment?
Yes, lenders calculate DTI using your total debts including the new mortgage payment you're applying for, not just your existing debts.
Can I lower my DTI before applying?
Yes, paying down credit cards or other loans, and avoiding new debt, are common ways to bring your ratio down before you apply.
Is DTI the same as my credit score?
No, they're separate measures. DTI looks at your income versus debt payments, while your credit score reflects your borrowing and repayment history.