Debt to income ratio
The two ratios on every application, and how much payment room you have under each program.
Your inputsNothing is saved or sent. Housing ratio = housing payment divided by income. Total ratio = housing plus all debts divided by income. Debts paid off within ten months are often excluded; ask the lender.
How to read it
The front end or housing ratio is the full house payment divided by gross monthly income. The back end or total ratio adds every monthly debt that shows on credit: cars, student loans, card minimums, other loans, and court ordered support. Lenders qualify on the back end ratio; the front end is a sanity check.
Guidelines differ by program and by how the file is underwritten. The table shows common ceilings and how much monthly payment you have left under each one, or how far over you are. Student loans in deferment, a new car lease, or a card balance paid off before closing can each move the answer.
An illustration, not a loan offer, a rate quote or advice. Your numbers depend on your application, the property and the lender. See disclaimers.
Questions people ask
What DTI do I need for a mortgage?
Conventional automated approvals commonly go to 45 percent total, and up to 50 percent with strong credit and reserves. FHA manual guidelines are 31 and 43, with automated approvals well above. VA uses 41 as a guideline with residual income as the deciding test. Jumbo and non QM lenders set their own, often 43 to 50.
Do utilities, insurance or phone bills count?
No. Only debts that appear on the credit report or are court ordered count. Taxes and insurance count inside the housing payment, not as separate debts.