Your debt-to-income ratio (DTI) is one of the most important numbers a lender looks at when you apply for a mortgage, car loan, or personal loan. It's often more decisive than your credit score. Yet most people have no idea what theirs is — or that a high DTI could silently tank their loan application before it even starts.
Your debt-to-income ratio is the percentage of your gross monthly income that goes toward debt payments. It's calculated by dividing your total monthly debt payments by your gross monthly income (before taxes).
For example: if you earn $6,000/month gross and your total debt payments are $2,000/month, your DTI is 33.3%.
Lenders typically include all of the following in your monthly debt total:
Things that are not included: utilities, groceries, insurance premiums, subscriptions, medical bills (unless they've become installment debt), and taxes. Only debt with a fixed monthly obligation counts.
Mortgage lenders specifically look at two different DTI numbers:
This is just your housing costs divided by gross income — mortgage principal, interest, property taxes, and homeowner's insurance (PITI). Most conventional lenders want this below 28%.
This is ALL debt payments (housing + all other debts) divided by gross income. This is the number most people refer to when they say "DTI." Conventional lenders typically want this below 36–43%.
| DTI Range | Rating | What Lenders Think |
|---|---|---|
| Under 20% | Excellent | Best rates, easiest approvals |
| 20%–35% | Good | Well-managed debt, approvable |
| 36%–43% | Acceptable | Most lenders will approve with good credit |
| 44%–49% | Risky | Some lenders approve, higher rates |
| 50%+ | High Risk | Most lenders decline; FHA may still approve |
A DTI under 36% signals financial health to lenders and puts you in the best position for loan approval and competitive interest rates. Under 20% is exceptional.
| Loan Type | Max DTI | Notes |
|---|---|---|
| Conventional (Fannie/Freddie) | 45–50% | Lower DTI = better rate |
| FHA Loan | 57% | More flexible, requires mortgage insurance |
| VA Loan | 41% guideline | Flexible for veterans with residual income |
| USDA Loan | 41–44% | For rural/suburban properties |
| Jumbo Loan | 38–43% | Stricter requirements |
| Personal Loan | Varies | Most lenders prefer under 40% |
Enter your income and debt payments to get your DTI instantly, see where you stand vs. lender requirements, and get actionable steps to improve it.
Many buyers get pre-approved based on current DTI, then take on new debt (car, furniture financing) before closing. This can tank your final approval. Freeze all new debt until after you close.
Both matter — but they measure different things. Your credit score measures how reliably you've repaid debt in the past. Your DTI measures how much debt you're carrying relative to your income right now. A lender needs both: a high credit score with a sky-high DTI often means someone who pays their bills but is stretched too thin to handle a new mortgage.
In practice, lenders use both in tandem. A great credit score (760+) can offset a slightly elevated DTI. But a DTI above 50% is hard to overcome regardless of your credit score.
Say you earn $7,500/month gross and want to buy a home with a $2,000/month mortgage payment. You also have:
Total debt payments: $2,900/month. DTI: $2,900 ÷ $7,500 = 38.7%. This is in the acceptable range for most conventional lenders. But if you add another $300/month in debt, you hit 42.7% — and if you have any negative credit marks, you could get declined.
Now imagine you paid off the credit cards first ($150/month removed): DTI drops to 36.0%. Much stronger application, potentially better rate.
Enter your income and debt payments to see your DTI, how lenders will view it, and exactly what to do to improve it.
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