What DTI is and why it decides your mortgage
Debt-to-income ratio is your monthly debt payments divided by your gross (pre-tax) monthly income. Lenders calculate two versions. The front-end ratio counts only the proposed housing payment — principal, interest, taxes, insurance, HOA. The back-end ratio adds every other recurring debt that appears on your credit report: car loans, student loans, credit card minimums, personal loans, plus court-ordered payments. Utilities, phone bills and groceries are not included.
In 2026, with rates above 7%, DTI is the constraint that stops most buyers before price does: the same income supports roughly 25% less mortgage than it did at 5%. That is why the calculator also works backwards — it shows the largest housing payment that keeps you under 43%, and the loan amount that payment buys at this week's rate.
The limits lenders actually use
| Loan type | Front-end guideline | Back-end limit | Notes |
|---|---|---|---|
| Conventional (Fannie/Freddie) | 28% (soft) | 43%–45%; up to 50% with automated approval | Strong credit and reserves needed above 45% |
| FHA | 31% | 43%; up to ~56.9% with compensating factors | Most forgiving on DTI |
| VA | none | 41% guideline; residual-income test matters more | Higher DTI common with residual income |
| Jumbo | varies | often 38%–43% | Tightest; large reserves required |
How to lower DTI before you apply
- Pay off small balances entirely. A $3,000 card with a $90 minimum removes $90 from the ratio; on a $12,000 income that is 0.75 points. Paying a loan down to 10 months or fewer remaining lets many lenders exclude it.
- Consolidate high-minimum debts. Lenders count minimum payments, not balances. A fixed loan with a longer term lowers the monthly figure DTI uses (and raises total interest — know the trade).
- Add income the lender can document. A co-borrower, bonus history, or two years of side income all count; cash does not.
- Do not open new credit in the 90 days before applying. New minimums count immediately, and the hard inquiry trims your score.
Once you know the payment you qualify for, turn it into a price with the Mortgage Calculator, and read How Much House Can You Afford for the full method.