What debt-to-income ratio means
Your debt-to-income (DTI) ratio is your total monthly debt payments divided by your gross (pre-tax) monthly income, written as a percentage. It tells a lender how much of your income is already committed before they add a new loan โ which is why itโs often the first number they check, ahead of your credit score. A lower DTI means more room in your budget and a stronger application.
Front-end vs. back-end (the 28/36 rule)
Lenders use two ratios. The front-end ratio counts only your housing payment (mortgage principal, interest, taxes and insurance โ โPITIโ, or your rent) and should ideally stay at or below 28% of gross income. The back-end ratio adds every other recurring debt โ car loans, student loans, minimum credit-card payments, personal loans โ and is usually capped around 36% for conventional loans. Together these thresholds are the classic โ28/36 rule.โ
The 43% qualified-mortgage line
Many loan programs are more flexible than 36%. A back-end ratio up to 43% is the widely used Qualified Mortgage limit, and FHA loans can stretch higher โ sometimes to 50% โ when you have compensating factors like a strong credit score or cash reserves. Above roughly 43%, approvals get harder and your rate may rise. Use this calculator to see exactly where you land before you apply.
How to lower your DTI
Two levers move the ratio: raise income or cut monthly debt. Paying off a small loan, lowering credit-card balances, or refinancing to a smaller payment all help โ see our credit-card payoff and loan calculators. To turn a target DTI into a home price, use the home affordability calculator, and to estimate the housing payment itself, the mortgage calculator.