Debt-to-Income Ratio for a Mortgage: How to Calculate It

To calculate your debt-to-income ratio for a mortgage, add up your monthly debt payments, including the new mortgage payment, and divide by your gross monthly income. With a $2,975.44 housing payment, $950.90 of other debts and $10,000 of monthly income before tax, your DTI is $3,926.34 ÷ $10,000 = 39.26%. Fannie Mae’s limit is 36% on a manually underwritten loan, up to 45% with strong credit and reserves, and 50% through its automated system.

That’s the sum. The part that trips people up is what counts. This guide shows which debts lenders include and leave out, the limits by loan type, how to turn a DTI limit into a loan size, and which debt to pay off first.

Debt-to-income ratio for a mortgage: the short answer

How to calculate debt-to-income ratio for a mortgage

1. Work out your gross monthly income. Salary ÷ 12. Hourly pay × weekly hours × 52 ÷ 12. A $60,000 salary is $5,000 a month. $25 an hour for 40 hours a week is $4,333.33.
2. Work out the new housing payment. Principal, interest, property tax, home insurance, mortgage insurance and any HOA dues. The home loan calculator gives the total.
3. List your other monthly debts. Car loan, student loans, minimum card payments, personal loans, child support and so on.
4. Add and divide. (Housing + other debts) ÷ gross monthly income × 100.

A worked example

A household with $120,000 of gross income, buying a $400,000 home with 10% down at 6.5% for 30 years.

• Housing ratio: $2,975.44 ÷ $10,000 = 29.75%.
• Total DTI: $3,926.34 ÷ $10,000 = 39.26%.

That’s above Fannie Mae’s 36% base for a manually underwritten loan, inside the 45% allowed with the required credit score and reserves, and inside DU’s 50%. The car loan is what’s costing the most: without it the DTI is 32.75%. The monthly car payment calculator shows how a car deal feeds into this number.

What counts as debt

Fannie Mae’s Selling Guide is the clearest published rulebook, and many lenders follow it. Other loan programs and lenders can differ.

What doesn’t count

DTI measures debt, not your whole budget. USDA’s rule spells out several things left out of its total debt ratio: personal income taxes, retirement contributions, savings, commuting costs, union dues and childcare. Everyday bills like groceries, utilities and your phone plan aren’t debts either. Your current rent doesn’t count when the new mortgage replaces it.

That’s why a passing DTI doesn’t prove you can afford a home. A family paying heavily for childcare can pass at 40% and still be stretched.

DTI limits by loan type

These are the outer limits. An individual lender can set a lower one, and the CFPB notes that different loan products and lenders have different DTI limits. Some articles still give 43% as a legal cap. The CFPB’s description of a Qualified Mortgage now refers to a limit on the loan’s price, and asks lenders to consider and verify your debts and income.

Turning a DTI limit into a payment

Multiply your gross monthly income by the limit. That’s the most your debts can total, including housing.

From payment to loan size

Take off your other debts, then property tax and insurance. What’s left is principal and interest, and that sets the loan. At 6.5% for 30 years, every $1 of monthly principal and interest carries about $158 of loan.

On $8,000 of monthly income, with $500 of other debts and $550 of tax and insurance:

These figures leave out PMI, which would apply on a small down payment and lower the loan a little. Check any result in the home loan calculator, which adds it in.

Why 36% feels like more than 36%

DTI is measured against gross pay, but you pay your bills out of take-home pay. On a $60,000 salary, 36% is $1,800 a month. A single filer in Arkansas takes home about $4,054.75 a month on that salary, so the same $1,800 is 44% of what actually reaches the bank. At 50% DTI, it’s $2,500, or nearly 62%.

Before settling on a figure, work out your own take-home pay and see what’s left after the payment. Our paycheck calculators for Arkansas, Texas and Michigan do this.

How to lower your DTI

• Pay off a loan with few payments left. Under Fannie Mae’s rule, an installment loan with ten or fewer payments remaining may drop out of the sum, unless it significantly affects your ability to pay. Ask your lender before paying one down just for this.
• Target the biggest payment per dollar owed. DTI cares about the monthly payment, not the balance. A $450 car payment nearly gone helps more than the same money put on a large student loan.
• Clear small card balances. A card with a $1,000 balance and a $35 minimum adds $35 a month. Paid off, it adds nothing.
• Put more down. It shrinks the loan and can remove PMI at 20% down. In the worked example, PMI alone is $150 a month.
• Add a co-borrower’s income, remembering that their debts come too.
• Pause new credit. A new car loan before closing can sink an approval.

What a debt costs you in buying power

At 6.5% for 30 years, each $100 of monthly debt takes about $15,800 off the loan you can carry at the same DTI. Paying off a $450 car payment frees up room for about $71,200 more loan. Whether borrowing that much is wise is a separate question.

Common mistakes

• Using take-home pay. The ratio uses gross income. Using net pay makes your DTI look worse than a lender would see it.
• Leaving out tax and insurance. In the worked example, principal and interest alone would give 22.75% before other debts; the full housing payment gives 29.75%.
• Counting today’s rent. It goes when the new mortgage starts.
• Assuming a $0 student loan payment counts as $0. The lender still has to work one out.
• Using card balances. It’s the minimum payment that counts, not the balance. Only when no minimum is shown does a lender use 5% of the balance.
• Treating the limit as a target. The limit is the most a program allows, not what your budget can bear.
• Counting overtime or bonus without asking. Lenders look for stable income. Ask how yours will be treated before relying on it.

Frequently asked questions

1. What is a good debt-to-income ratio for a mortgage?

Lower is better, and 36% is a useful line: it’s Fannie Mae’s base limit for manually underwritten loans. Between 36% and 45% you’d need stronger credit and reserves on a manual loan. Up to 50% is possible through Fannie Mae’s automated system.

2. Is DTI based on gross or net income?

Gross income, before tax and other deductions. The CFPB defines it as your monthly debt payments divided by your gross monthly income.

3. Does the DTI include the new mortgage payment?

Yes. A lender works out the total with the proposed housing payment, including tax, insurance, mortgage insurance and association dues, in place of your current rent.

4. Do utilities and phone bills count?

No. They aren’t debts. Neither are groceries or insurance on your car. They do affect what you can actually afford.

5. What is the difference between front-end and back-end DTI?

Front-end is the housing payment alone divided by gross income. Back-end is all your monthly debts, housing included, divided by gross income. “DTI” on its own usually means back-end.

6. Can I get a mortgage with a 50% DTI?

Possibly. Fannie Mae’s DU allows up to 50% if the rest of the file passes. Above 50% a loan isn’t eligible for delivery to Fannie Mae. Individual lenders can set lower limits.

7. What DTI do I need for a VA or USDA loan?

VA uses 41% as a guideline alongside a residual income test, and a higher ratio can be approved with justification. USDA uses 29% for housing and 41% in total, and can go above that with compensating factors.

8. Do student loans in deferment count?

Under Fannie Mae’s rules, yes. Deferred installment debts are included, and a student loan showing $0 still needs a qualifying payment worked out.

Run your own numbers

Now you know how to calculate debt-to-income ratio for a mortgage. The housing payment is the piece most people guess at, so start there. The home loan calculator gives the full monthly figure with tax, insurance, PMI and HOA dues, and shows when PMI comes off. Add your other debts and divide by your gross monthly income. It runs in your browser and stores nothing.

This guide is general information, not lending advice. Your lender’s underwriting decides what you qualify for.

Sources

• Fannie Mae Selling Guide: B3-6-02, Debt-to-Income Ratios; B3-6-03, Monthly Housing Expense for the Subject Property; B3-6-05, Monthly Debt Obligations.
• Consumer Financial Protection Bureau: “What is a debt-to-income ratio?” and “What is a Qualified Mortgage?”
• 38 CFR 36.4340, VA underwriting standards: debt-to-income ratio and residual income.
• 7 CFR 3555.151, USDA Single Family Housing Guaranteed Loan Program: 29% and 41% repayment ratios, and what is left out of them.
• Payment figures calculated with the FreeToolBank home loan calculator.

All checked on October 31, 2026.