Compute your front-end and back-end debt-to-income ratios — the numbers mortgage lenders use to qualify you.
What is DTI? Front-end vs. back-end
Your debt-to-income ratio is the share of your gross monthly income consumed by debt payments. Lenders look at two versions. The front-end ratio counts only housing costs — principal, interest, property tax, homeowner’s insurance, and HOA dues (PITI). The back-end ratio adds every other recurring debt: car loans, student loans, credit-card minimums, personal loans, and child support. A borrower can pass the front-end test and fail the back-end one, which is why lenders always compute both.
The 28/36 rule and the 43% QM ceiling
The textbook guideline is 28/36: no more than 28% of gross income on housing, no more than 36% on all debts combined. In practice, most conventional lenders approve back-end ratios up to 43–45% for borrowers with strong credit, cash reserves, or a large down payment, and FHA/VA programs go higher still. But the further past 36% you go, the thinner your margin for everything the ratio ignores — taxes, groceries, savings, and emergencies.
How to lower your DTI before applying
You cannot change your income overnight, so attack the numerator: pay off a car loan, eliminate credit-card minimums, or choose a less expensive home to shrink the housing payment. Avoid opening new credit or financing furniture before closing — a new $400 monthly payment on a $10,000 monthly income adds 4 full points to your back-end ratio, which can kill an approval at the margin.
What is a good debt-to-income ratio?
Under 36% back-end is considered strong by most lenders, and under 28% front-end keeps housing comfortable. Between 36% and 43% is approvable with compensating factors; above 43% is difficult for conventional loans.
What is the difference between front-end and back-end DTI?
Front-end DTI is housing costs divided by gross monthly income. Back-end DTI is all monthly debt payments — including housing — divided by gross monthly income. Lenders evaluate both.
Do lenders use gross or net income for DTI?
Gross — your pre-tax income. This flatters the ratio slightly, since taxes never appear in it. Always sanity-check the resulting payment against your actual take-home pay before committing.
Can I get a mortgage with a 50% DTI?
Rarely through conventional channels — 43% is the qualified-mortgage ceiling most lenders observe. Some FHA, VA, or non-QM programs allow higher ratios with strong compensating factors, usually at higher rates.
Do utilities and groceries count in my DTI?
No. DTI counts only debt obligations — loan payments, minimums, and support orders. Utilities, groceries, subscriptions, and discretionary spending are invisible to the ratio, which is exactly why your budget must be stricter than your DTI.