Front-end vs. back-end — and why both matter
Front-end DTI tells lenders whether you can afford the house itself. Back-end DTI tells them whether you can afford the house AND your existing life. The classic 28/36 rule: keep housing ≤28% of gross, total debt ≤36%. Modern conforming loans push to 31/43, FHA to 31/50, and high-balance jumbos sometimes accept 35/43 with strong reserves.
What lenders actually count as 'debt'
Counted: mortgage/rent, car payments, student loan minimums (even if deferred — they impute 0.5–1% of balance), credit card minimum payments (not balances), alimony, child support, personal loans, co-signed debts. Not counted: utilities, insurance not in escrow, groceries, daycare, gym memberships, subscriptions. Self-employed: lenders typically use 2-year average net income from tax returns (line 31 of Schedule C, K-1 ordinary income), not gross revenue.
How to lower your DTI before applying
Fastest moves: pay off a single credit card to eliminate its minimum, pay off a low-balance car loan (often saves $400–600/mo of counted debt for $5K cash), refinance student loans into a lower payment (counted as the actual payment, not the balance), avoid opening new credit lines (each opens 30–60 days of credit-pull seasoning).
- • Paying off a $4,500 auto loan eliminates a $450/mo debt = 4.7% DTI improvement at $9,500 income.
- • Refinancing a $40K student loan from $450/mo to $250/mo lowers DTI by 2.1% at the same income.
- • Don't pay off credit cards then close them — keep utilization low to maintain credit score.
DTI is one of three pillars
Mortgage qualification rests on DTI + LTV (loan-to-value, requires down payment) + credit score. A 720 FICO with 25% down and 38% DTI can get a conventional 30-year fixed at the best advertised rate. A 680 with 5% down and 47% DTI will pay 0.5–1.0% higher and may need FHA. Improve any one of the three to unlock better terms.
FAQ
What's a good DTI ratio in 2026?
Back-end DTI ≤ 36% is excellent and qualifies for the best rates. 36–43% is acceptable for most conventional loans. 43–50% requires FHA or strong compensating factors. Above 50% generally requires paying down debt first.
Does the calculator use minimum payments or total balances?
Lenders use minimum monthly payments (or imputed minimums for deferred loans). Total balance doesn't matter for DTI — a $50K car loan at $400/mo counts the same as a $20K loan at $400/mo. This calculator follows the lender convention.
How do lenders treat deferred student loans?
Most lenders impute 0.5–1% of the loan balance as the monthly payment for DTI purposes, even if you're currently in deferment or paying $0 on IDR. A $60K deferred loan adds $300–600/mo to DTI.
Is rent included in DTI?
Your current rent isn't counted (you'll move out when you buy). The proposed new housing payment is. If you'll keep the rental as an investment, the new mortgage adds to DTI but 75% of rental income is added to gross.
What's the difference between DTI and the 28/36 rule?
Same thing. The 28% is front-end DTI (housing only), the 36% is back-end DTI (all debt). The rule predates modern conforming loans (which stretch to 43%) but it's still the prudent target.
Does FHA really allow 57% DTI?
Yes, with manual underwriting and compensating factors: 680+ FICO, 2+ months reserves, modest payment shock (<20% increase from current housing). Most automated FHA approvals cap at 47–50%.
How this calculator is built
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Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.
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Last reviewed
June 2026. We re-check every figure on the platform on a rolling quarterly cycle.
Editorial standards
See our editorial policy and disclaimer. Results are estimates, not advice.