How to Calculate Your Debt-to-Income Ratio in 2026
Your debt-to-income ratio is the first number a mortgage lender looks at, and you can work it out in two minutes. This guide gives the formula, a worked example, and current lender standards.
What is a debt-to-income ratio?
Your debt-to-income ratio, or DTI, is the percentage of your gross monthly income that goes toward required debt payments. Lenders use it to judge whether you can afford a new loan payment without being stretched too thin. A lower ratio means more of your income is free, which lenders read as lower risk.
There are two versions. The front-end ratio covers housing only, while the back-end ratio covers every recurring debt, including car loans, student loans, and card minimums. Mortgage decisions rest mainly on the back-end ratio. Both use gross income, before taxes and deductions.
For your own numbers, use our free debt-to-income ratio calculator to get both ratios instantly.
How do you calculate your debt-to-income ratio?
Add up every required monthly debt payment, divide the total by your gross monthly income, and multiply by 100. For the front-end ratio, use only your housing payment in the numerator. The result is a percentage, and that percentage is your DTI.
Take a borrower earning $6,000 a month, paying $1,800 in housing, $350 on a car loan, $150 on a student loan, and $100 in card minimums: total debts are $2,400, so front-end DTI is 30.0% and back-end DTI is 40.0%.
A common mistake is using take-home pay instead of gross income, which inflates the ratio. Another is entering full card balances instead of minimum payments: only the required monthly payment counts.
What is a good debt-to-income ratio?
The classic guideline is 28/36: housing costs at most 28% of gross income, and total debts at most 36%. Hitting both numbers puts you in the preferred range for most conventional mortgages. Exceeding 36% does not disqualify you, but lenders will examine compensating factors more closely.
In practice, ratios from 37% to 43% are commonly accepted with compensating factors such as a strong credit score or solid reserves. Fannie Mae’s automated underwriting can accept up to 50% with strong factors. Above 50%, approval becomes difficult.
The takeaway: under 36% is comfortable, the 40s are workable with a strong file, and above 50% means reducing debts or borrowing less first. Our mortgage affordability calculator shows how much house your income and debts can support.
Is 43% still a hard DTI cap for mortgages?
No, 43% is no longer a hard cap. The Consumer Financial Protection Bureau’s original Qualified Mortgage rule used a 43% DTI ceiling, but the revised price-based General QM rule, effective March 1, 2021, removed it. Lenders must still consider and verify DTI, but no single percentage now automatically blocks a loan.
That change matters because many older guides still quote 43% as a hard limit. Individual programs still apply their own limits: FHA manual underwriting uses 31% front-end and 43% back-end, although automated approvals can go higher. Always check the program’s own rules.
What is the difference between front-end and back-end DTI?
The front-end ratio measures housing alone: rent or mortgage, including property taxes, insurance, and HOA dues, divided by gross monthly income. The back-end ratio measures everything: housing plus car loans, student loans, card minimums, personal loans, child support, and alimony.
A borrower can pass one test and fail the other. A $1,800 housing payment on $6,000 of income gives a front-end ratio of 30.0%, just above the 28% guideline, while $600 of other debts pushes the back-end ratio to 40.0%. Lenders weight the back-end figure more heavily.
When you shop for a home, both ratios move together: a cheaper house lowers them both. Our mortgage payment calculator lets you test how prices and rates change the payment feeding into both ratios.
Which debts count toward your DTI?
Every recurring, required payment counts: rent or mortgage, car loans and leases, student loans, card minimums, personal loans, and court-ordered payments such as child support and alimony. If a payment is required each month and missing it has consequences, it belongs in the calculation.
Several everyday costs do not count. Groceries, utilities, subscriptions, insurance, and income taxes are living costs, not debts, and lenders exclude them. Childcare is usually excluded too.
Student loan note: in an income-driven repayment plan, lenders generally use the actual payment, and deferred loans may still be counted at an estimated payment.
How can you lower your DTI before applying for a mortgage?
Pay down the smallest debts first, because clearing a $100 minimum payment raises your borrowing room by exactly $100, and small balances are fastest to eliminate. Refinancing to a lower rate or longer term also cuts the monthly payment, lowering the ratio’s numerator.
Raising documented income works from the other side: a raise, a second job, or regular freelance income counts once stable and documented. Avoid new debts before applying, since lenders re-check credit before closing.
Timing matters too. Finishing a nearly paid-off loan before you apply removes that payment entirely. Check the calculator before and after each planned payoff.
What do people ask most about debt-to-income ratios?
The questions below answer the points that confuse borrowers most about DTI: which income figure to use, whether card balances count, what happens above 50%, and how quickly a ratio can change. Each answer is short and direct. Read them before you apply.
Should I use gross or net income for DTI?
Gross income, always. DTI is defined on pre-tax pay, and using take-home pay overstates your ratio. On a $72,000 salary, your gross monthly income for DTI is $6,000.
Do credit card balances count, or just minimum payments?
Just the minimum payments. A $5,000 balance with a $100 minimum adds $100 to your monthly debts, not $5,000. Paying a card to zero helps DTI immediately, since the minimum disappears.
Can I get a mortgage with a DTI above 50%?
It is difficult, but not impossible. Some programs allow ratios above 50% with exceptional compensating factors, such as large reserves and a high credit score. Most borrowers above 50% must reduce debts or borrow less.
How fast can my DTI change?
Very fast. Paying off one loan removes its payment the next month, and a raise changes the denominator once documented. Check your ratio months before applying, not the week you apply, so you have time to improve it.
Disclaimer: This article is for education only, not financial advice. Debt-to-income guidelines vary by lender and loan program and change over time. Confirm current requirements with your lender before applying.
