Lending
Debt-to-Income Ratio for a Mortgage, Explained Plainly
What DTI is, which debts lenders count, and how to figure your own with a simple example.
Talk to Maggie directly: cell (916) 549-3131 (text or call) · maggie@loveyoursurroundings.coMaggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307
What is debt-to-income ratio?
The CFPB defines your debt-to-income ratio, or DTI, as all your monthly debt payments divided by your gross monthly income (page last reviewed August 28, 2023). Gross means before taxes and other deductions come out.
Lenders use DTI to judge whether you can manage the new payment along with what you already owe. The CFPB notes that different loan products and lenders set different limits. A lender's limit is the most it allows. It isn't a measure of what feels comfortable in your budget.
What is the difference between front-end and back-end DTI?
- Front-end ratio (sometimes called the housing ratio) looks only at your new housing payment compared with your gross monthly income.
- Back-end ratio adds every other monthly debt to that housing payment. When people say "DTI," they usually mean this one.
For conventional loans, Fannie Mae's Selling Guide (topic B3-6-02, dated April 2, 2025) counts the full housing payment. That includes principal, interest, property tax, homeowners insurance and any HOA dues on the home you're buying. FHA, VA and other loan types use their own versions of these ratios.
How do you figure your own DTI?
Here is a simple example. The numbers are for example only.
- Gross monthly income: $8,000
- Estimated new housing payment, including property tax, insurance and HOA: $2,400
- Car payment: $400
- Student loan payment: $200
- Credit card minimum payments: $100
Front-end ratio: $2,400 divided by $8,000 is 30%.
Back-end ratio: $2,400 plus $400, $200 and $100 is $3,100. Then $3,100 divided by $8,000 is about 39%.
To estimate the housing piece, try our mortgage calculator and our Sacramento property tax calculator. Property tax in California is based on the purchase price, so it's worth getting that line right.
Which debts do lenders count?
For conventional loans, Fannie Mae's guide (topics B3-6-02 and B3-6-05, dated August 5, 2026) generally counts:
- Installment loans, like car loans, with more than ten payments left. Ones with ten or fewer left can still count if they're large.
- Minimum payments on credit cards and other revolving accounts
- Lease payments, such as a car lease, no matter how many months are left
- Payments on other mortgages and properties you own
- Alimony, child support and separate maintenance that must continue for more than ten months
- Any net loss from a rental property
Lenders usually don't count everyday costs like utilities, phone bills, groceries or insurance on your car. Your budget still has to cover them, which is why we encourage you to pick a payment that feels comfortable, not the maximum.
How are student loans counted?
Student loans trip up many buyers, especially when a loan is deferred. For conventional loans, Fannie Mae's guide (topic B3-6-05, dated August 5, 2026) says:
- If your credit report shows a monthly payment, the lender may use it. If that payment is wrong, the lender can use the payment on your latest student loan statement.
- If you're on an income-driven plan and your payment really is $0, the lender can verify that and qualify you at $0.
- If the loan is deferred or in forbearance, the lender uses either 1% of the balance or a full payment based on your documented repayment terms.
For example only: on a deferred $30,000 balance, 1% of the balance counts as $300 a month. FHA, VA and other loans have their own student loan rules, and they can come out quite differently. That's one reason we compare more than one loan type.
How are alimony and child support counted?
If you pay court-ordered alimony, child support or separate maintenance that must continue for more than ten months, Fannie Mae's guide counts it as a monthly debt. Voluntary payments don't count. For alimony and separate maintenance, the lender may instead subtract the payment from your income.
If you receive support, it can sometimes count as income when it is documented and expected to continue. Lenders will want the court order or agreement. If you're going through a divorce, see our divorce real estate page, and talk with us early. The timing of the agreement can affect what counts.
How can you lower your DTI before you apply?
- Pay down or pay off a small installment loan or card balance. Ask us first which one helps most.
- Avoid new car loans and new credit cards while you're shopping.
- Make sure every source of income you have is documented, so it can be counted.
- Look at a different price range, a larger down payment or a different loan type.
- Consider adding a co-borrower, if that makes sense for your family.
Small changes can matter. We run the numbers each way so you see which step makes the real difference before you spend any money.
How do you start figuring out what you can afford?
Fill out the loan options form or call Maggie's cell at (916) 549-3131. We'll figure your DTI for each loan type that fits and show you the results side by side. You're free to use any lender, and we'd welcome the chance to quote yours.
Keep reading: getting preapproved, credit scores and down payments and gift funds.
Frequently Asked Questions
How do I calculate my debt-to-income ratio?
Add up your monthly debt payments, including the new housing payment, and divide by your gross monthly income before taxes. For example only: $3,100 in payments divided by $8,000 in income is about 39%.
What is the maximum DTI for a conventional loan?
Fannie Mae's guide, dated April 2, 2025, sets a 50% maximum for loans run through its automated system, Desktop Underwriter. Manually underwritten loans start at 36% and can go up to 45% with stronger credit and reserves. Other loan types have their own limits.
Do utilities and phone bills count in my DTI?
Usually not. Lenders generally count debts that show on your credit report plus obligations like leases, support and the new housing payment. Your budget still has to cover everyday bills.
My student loans are deferred. Do they still count?
For conventional loans, yes. Fannie Mae's guide uses either 1% of the balance or a full payment based on your repayment terms. Other loan types have different rules, so compare them.
Does child support I pay count against me?
If it's required and will continue for more than ten months, it's counted as a monthly debt for conventional loans. Voluntary payments aren't counted.
Talk to Maggie directly: cell (916) 549-3131 (text or call) · maggie@loveyoursurroundings.coMaggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307
Loans are arranged through Maggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307. This is not a commitment to lend. All loans subject to credit approval and property qualification. Equal Housing Lender.
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