Debt-to-Income Ratio: The Number That Decides Your Loan Size
Lenders judge you by two DTI numbers — front-end (housing) and back-end (all debts). Learn the 28/36 rule, FHA limits, and how to calculate and improve yours.
By The RateFig Editorial Team · July 30, 2026 · reviewed against official mortgage and rate sources
Your debt-to-income ratio (DTI) is the gatekeeper of mortgage approval. Two borrowers with the same income can qualify for very different loan amounts purely because one carries more monthly debt. Lenders compute two versions of this ratio, and understanding both tells you exactly how much house you can afford.
Front-end vs back-end DTI
- Front-end DTI = housing payment ÷ gross monthly income. The housing payment is PITI: principal, interest, taxes, insurance.
- Back-end DTI = (housing payment + all other monthly debts) ÷ gross monthly income. "Other debts" means the minimum payments on credit cards, auto loans, student loans, personal loans, and court-ordered obligations.
Lenders care most about the back-end number because it reflects your total monthly obligations.
The 28/36 rule
The classic conventional benchmark:
| Ratio | Target | What it caps | |-------|--------|--------------| | Front-end | ~28% | Housing payment only | | Back-end | ~36% | Housing + all other debt |
So on a $7,000 monthly gross income, the 28/36 rule suggests a housing payment near $1,960 and total debts near $2,520.
In practice, many conventional loans now allow back-end DTI up to 43%–45% with solid credit, and FHA can go to 43%–57% when you have compensating factors (cash reserves, a larger down payment, or a high credit score).
A worked example
Borrower: $7,000/month gross income; $400 car payment; $200 minimum credit-card payments; projected PITI of $2,000.
- Front-end DTI = $2,000 ÷ $7,000 = 28.6%
- Back-end DTI = ($2,000 + $400 + $200) ÷ $7,000 = 37.1%
That back-end figure sits inside typical conventional limits but above the ideal 36%. Lowering the card balances or putting more down (which cuts PITI) would pull it comfortably under.
Why DTI limits your loan amount
Because PITI is the largest piece, DTI is really a constraint on your maximum affordable payment, which in turn caps your loan amount. Use the affordability calculator to convert an income and DTI ceiling into a home-price range instead of guessing.
How to improve a high DTI
- Pay down revolving debt. Reducing card balances lowers your minimum required payment, which drops back-end DTI fast.
- Avoid new loans in the months before applying — a new car or furniture loan can push you over the line.
- Increase your down payment. A smaller loan means a smaller PITI, improving both ratios.
- Boost income documentation (a raise, a second job) where allowed.
- Consider FHA or VA if your DTI is high but you have compensating strengths; their ceilings are more flexible.
Key Takeaways
DTI is the lens lenders use to size your loan: front-end caps the housing payment, back-end caps total debt. Keep back-end DTI near or below 36%–43% to qualify comfortably. Model your own numbers in the affordability calculator before house hunting so you shop within a real budget.
Frequently Asked Questions
What is the difference between front-end and back-end DTI?+
Front-end DTI compares only your new housing payment (principal, interest, taxes, insurance) to your gross monthly income. Back-end DTI adds every other monthly debt — car loans, student loans, credit cards, alimony — on top of the housing payment. Lenders weigh the back-end number most heavily.
What DTI do lenders want?+
For conventional loans the common targets are about 28% front-end and 36% back-end, though many programs allow back-end DTI up to 43%–45% with strong credit. FHA can approve back-end DTI as high as 43%–57% when you have compensating factors like cash reserves or a larger down payment.
How do I calculate my own DTI?+
Add your expected monthly housing payment (PITI) to all other minimum monthly debt payments, then divide by your gross monthly income before taxes. For example, $2,000 housing + $600 other debt on $7,000 income = 37% back-end DTI.
Does DTI consider my existing mortgage if I am buying another home?+
Yes. Any current housing payment counts in your back-end DTI unless the new home will replace it and you can document the sale or a signed lease on the old one. Lenders also test whether you can carry both payments in some cases.
What is the fastest way to lower my DTI?+
Pay down revolving balances (credit cards reduce your minimum payment fastest), avoid taking on new loans before applying, and increase your down payment so the financed loan — and often the required PITI — is smaller. Higher income also helps, but is harder to change quickly.
Run the Numbers Yourself
Reading is the first step. The next is plugging your own numbers into a calculator that runs the same US-standard formulas in real time — no signup, no paywall, instant results.
Check your buying power→Key Takeaways
Use the calculator linked above to confirm how these concepts apply to your specific loan amount, rate, and term. Small changes in any one input can shift your monthly payment and total interest by thousands of dollars over the life of the loan.