See the debt-to-income ratio lenders use to approve mortgages and loans — your front-end and back-end DTI, plus where you stand against the 36% guideline.
Your debt-to-income ratio (DTI) is the share of your gross monthly income that goes toward debt payments. Lenders rely on it to decide whether you can afford a new loan. A lower DTI signals you have room in your budget; a high DTI is the most common reason mortgage applications are denied.
Front-end DTI counts only your housing payment against your income, while back-end DTI counts all debt — housing plus car loans, student loans, and minimum credit card payments. Mortgage lenders focus on back-end DTI but watch both. This calculator shows each.
The classic guideline is the 28/36 rule: keep housing at or below 28% of gross income and total debt at or below 36%. Many lenders allow more — qualified mortgages permit back-end DTI up to 43%, and some programs go higher with strong credit and reserves. Below 36% keeps the most doors open.
You can improve your ratio two ways: reduce debt or increase income. Paying off a car loan or credit card removes that minimum payment from the calculation entirely. Avoid taking on new debt in the months before a mortgage application, since lenders re-check DTI right before closing.
Tip: Lenders use your gross (pre-tax) income and the minimum required payments, not what you actually pay. If you pay extra on cards each month, only the minimum counts toward DTI.