Mortgage Debt-to-Income Ratio Calculator

Estimate your mortgage debt-to-income (DTI) ratio. Lenders use this ratio to evaluate how much of your income goes toward paying your mortgage and other debts. This can help you understand if you qualify for a mortgage loan.

Understanding Your Mortgage Debt-to-Income Ratio

Your mortgage debt-to-income (DTI) ratio is a key factor that lenders use to evaluate your ability to repay a mortgage loan. It compares your monthly debt payments to your monthly gross income, and helps lenders assess how much of your income goes toward paying debt.

Formula for Calculating Mortgage DTI Ratio

The formula for calculating the mortgage DTI ratio is:

DTI Ratio = (Monthly Mortgage Payment + Other Monthly Debts) ÷ Monthly Gross Income × 100

Where:

  • Monthly Mortgage Payment: Your monthly payment for the mortgage loan, including principal, interest, property taxes, and insurance.
  • Other Monthly Debts: Other debt payments, such as car loans, credit cards, student loans, and personal loans.
  • Monthly Gross Income: Your total monthly income before taxes and deductions.

Why Mortgage DTI Ratio Matters

Lenders use your DTI ratio to determine how much of your income is allocated to debt payments. A lower DTI ratio indicates that you have more income available to cover new debt payments, such as a mortgage loan. A higher DTI ratio may indicate that you are already carrying a significant amount of debt, which can make it harder to manage additional mortgage payments.

What is Considered a Good Mortgage DTI Ratio?

A good mortgage DTI ratio generally falls below 43%, though some lenders may allow higher ratios, depending on the type of loan or other factors such as credit score. A lower DTI ratio means you are in a better financial position to take on a mortgage loan.

DTI Ratio Categories:

  • 0%-20%: Excellent. You have very little debt relative to your income.
  • 20%-36%: Good. You can likely qualify for a mortgage with favorable terms.
  • 36%-43%: Fair. You may still qualify for some loans, but may face higher interest rates.
  • 43%+: High. It may be more difficult to qualify for a mortgage, and you may face high interest rates or stricter loan terms.

Factors That Impact Your Mortgage DTI Ratio

  • Income: A higher income helps lower your DTI ratio by increasing your capacity to handle debt payments.
  • Debt Payments: Reducing existing debts, such as credit card balances or car loans, can improve your DTI ratio.
  • Loan Type: Different types of loans have different qualifying criteria. For example, FHA loans may allow a higher DTI ratio than conventional loans.

How to Improve Your Mortgage DTI Ratio

  • Pay down existing debt: Reducing credit card debt or personal loans can significantly improve your DTI ratio.
  • Increase your income: Increasing your monthly income through a raise, side job, or investment income can help lower your DTI ratio.
  • Refinance your debts: Refinancing high-interest loans to lower monthly payments can also help improve your ratio.

Frequently Asked Questions About Mortgage DTI Ratios

What is the maximum DTI ratio to qualify for a mortgage?

Most conventional lenders prefer a DTI ratio below 43%, with some exceptions:

  • Conventional loans: Typically 43-45% maximum
  • FHA loans: May allow up to 50% with strong compensating factors
  • VA loans: No strict maximum, but generally below 41% is preferred
  • Jumbo loans: Often require DTI below 36-40%
Higher ratios may be approved with excellent credit scores or significant cash reserves.

How is front-end vs back-end DTI ratio different?

Lenders evaluate two types of DTI:

  • Front-end ratio: Only housing costs (mortgage, taxes, insurance) ÷ gross income
  • Back-end ratio: All debt payments (housing + other debts) ÷ gross income
Most lenders focus on back-end ratio, but some programs have front-end limits (typically 28-31%).

Does DTI include credit card minimum payments or full balances?

Lenders use:

  • Minimum payments for cards you carry balances on
  • 1-2% of balance for cards you pay in full each month
  • Actual payment for installment loans with fixed terms
Even if you pay more than minimums, lenders must use standardized calculations.

What monthly expenses don't count toward DTI?

These common expenses typically aren't included:

  • Utilities (electric, water, gas)
  • Phone/internet bills
  • Insurance (auto, life, health)
  • Groceries and entertainment
  • Childcare expenses
Only contractual debt obligations are counted in DTI calculations.

How can I lower my DTI ratio quickly?

Effective strategies include:

  • Pay down credit cards to reduce minimum payments
  • Pay off small loans completely to remove them from DTI
  • Increase income with overtime, side jobs or raises
  • Extend loan terms on existing debts to lower payments
  • Have someone co-sign to combine incomes (for joint applications)
Even small reductions can make a big difference in qualifying.

Does rental income count toward DTI calculations?

Yes, with important caveats:

  • Lenders typically count 75% of gross rent (to account for vacancies/expenses)
  • You must show 2+ years landlord experience or a signed lease
  • The property must have positive cash flow (rent exceeds mortgage)
  • Some programs require 6+ months reserves for rental properties
Rental income can significantly improve your DTI if documented properly.

How do student loans affect DTI ratio?

Student loan treatment varies:

  • In repayment: Use actual payment amount
  • Deferred/forbearance: Use 1% of balance or $5/month (whichever is greater)
  • Income-driven plans: Use the certified payment amount
  • Parent PLUS loans: Count if you're responsible for repayment
Student loans often have outsized impact on DTI due to large balances.