To calculate your debt-to-income ratio, add up your monthly debt payments, divide by your gross monthly income, and multiply by 100. $2,300 of monthly debt on $6,000 of income is a 38.3% DTI. Lenders generally like to see 36% or less and rarely approve a mortgage above 50%.
The formula
DTI = (total monthly debt payments ÷ gross monthly income) × 100
Two details trip people up. First, it's gross income, what you earn before tax, 401(k) and health insurance come out. Second, "debt payments" means the minimum you're required to pay each month on debts, not your spending.
Calculate it in 3 steps
Let's use a real-looking budget: a $72,000 salary, $1,500 rent, a $400 car payment, $250 in student loans and $150 in credit card minimums.
Step 1, find gross monthly income: $72,000 ÷ 12 = $6,000.
Step 2, add up monthly debt payments: $1,500 + $400 + $250 + $150 = $2,300.
Step 3, divide and multiply by 100: $2,300 ÷ $6,000 = 0.383, or a 38.3% DTI.
That's acceptable for most mortgages but a little above the 36% comfort zone. Paying off the credit card would drop it to 35.8%, because the whole $150 payment disappears from the top of the fraction.
Front-end ratio: divide only your housing payment by income. Here that's $1,500 ÷ $6,000 = 25%. FHA guidelines look for roughly 31% or less on this number.
What counts as debt (and what doesn't)
| Counts toward DTI | Doesn't count |
|---|---|
| Rent or mortgage payment, including property tax, homeowners insurance and HOA dues | Utilities, phone and internet |
| Car loans and leases | Groceries, gas and dining out |
| Student loans | Health and car insurance premiums |
| Credit card minimum payments | Subscriptions and streaming |
| Personal loans and other installment loans | Income taxes and payroll deductions |
| Court-ordered child support or alimony | Savings and retirement contributions |
If a credit card has a balance but no stated minimum yet, lenders still assign a payment to it, so don't leave cards out because you pay them in full some months.
DTI limits lenders actually use
| Loan type | Typical DTI limit |
|---|---|
| Conventional (Fannie Mae), automated underwriting | Up to 50% |
| Conventional (Fannie Mae), manual underwriting | 36%, up to 45% with strong credit and reserves |
| FHA | 31% front-end / 43% back-end standard; up to about 50% with compensating factors |
You'll often read that 43% is the hard maximum for a mortgage. That number comes from the qualified-mortgage rules written after 2010, but it isn't how lenders behave today. A St. Louis Fed study of more than 30 million home purchase applications from 2018 to 2024 found denial rates stayed roughly flat between 20% and 50% DTI, barely moved at 43%, and then rose sharply above 50%, passing 80% for applicants above 60%.
Sources: Fannie Mae Selling Guide B3-6-02, HUD FHA guidelines, St. Louis Fed (June 2026). Individual lenders, and other loan types like auto and personal loans, can use different limits.
How to lower your DTI
Clear small balances first. DTI cares about monthly payments, not total debt. Paying off a $1,200 card with a $40 minimum removes $40 a month; putting $1,200 toward a car loan changes nothing until it's gone.
Don't open new credit before you apply. A new car loan or store card adds a payment straight to the top of the ratio.
Refinance or extend a payment, carefully. A lower monthly payment improves DTI even if the loan costs more overall, so weigh the trade-off with a refinance calculator.
Add documented income. A raise, a co-borrower, or side income you can prove with tax returns increases the bottom of the fraction. More levers are in how to improve your loan eligibility.
Check your own ratio
Enter your income and debts to see your front-end and back-end DTI instantly.
Open the debt-to-income calculator →Quick answers
What is the formula for debt-to-income ratio?
DTI = total monthly debt payments ÷ gross monthly income × 100. Use your income before taxes and only recurring debt payments, not everyday living costs.
Is rent included in debt-to-income ratio?
Yes, when you're applying for something other than a mortgage, such as a car loan, lenders usually count your current rent. When you apply for a mortgage, the new mortgage payment replaces your rent in the calculation.
How do I calculate DTI if my income changes month to month?
Lenders typically average variable income, such as commissions, bonuses or self-employment earnings, over the last one to two years. To estimate your own DTI, add up your last 12 or 24 months of gross income and divide by the number of months.
How can I lower my debt-to-income ratio fast?
Pay off a small balance completely, because removing a whole monthly payment moves DTI more than shaving a big one. Avoid new credit before you apply, and if possible add documented income, such as a co-borrower's.
General information only, not financial or lending advice.