Debt-to-Income Ratio for a Mortgage: What Is a Good DTI?

Your debt-to-income ratio, or DTI, is as important as your credit score and job stability to qualify for a home loan. A high DTI was the most common primary reason lenders denied mortgage applications in 2022, according to a NerdWallet analysis of the most recently available federal mortgage data.

What is debt-to-income ratio?

Your debt-to-income ratio, or DTI, is the percentage of your monthly gross income that goes toward paying off debt, such as credit cards, car loans and student loans. When you're applying for a home loan, lenders will also include your future monthly mortgage payment in the calculation. DTI generally leaves out other monthly expenses such as food, utilities, transportation costs and health insurance, among others.

Lenders use DTI to gauge the likelihood that you'll be able to pay off a new loan, given other debt obligations, and to decide how much you can borrow.

You’ll want the lowest DTI possible not just to qualify with the best mortgage lenders and buy a home, but also to ensure you can pay your debts and live comfortably at the same time.

» MORE: 5 tips for finding the best mortgage lenders

Front-end and back-end DTI

Mortgage lenders consider two types of DTI ratios — the front end and the back end.

Front-end ratio

Front-end DTI is your future monthly mortgage payment — including property taxes, home insurance and mortgage insurance — divided by your monthly gross income.

Back-end ratio

The back-end DTI includes all your monthly debt payments — such as credit cards, student loans, personal loans and car loans — in addition to the mortgage payment. Back-end ratios tend to be higher, since they take into account all of your monthly debt obligations.

While mortgage lenders typically look at both types of DTI, the back-end ratio often holds more sway because it takes into account your entire debt load.

Calculate your DTI

How to calculate debt-to-income ratio for a mortgage

• Check pay stubs to find out your monthly gross income, the amount before taxes and other deductions. 

• Track down figures for all your monthly debt payments for loans and credit cards. Include monthly payments for alimony and child support. For credit cards, include the minimum monthly amounts due, even if you pay off more per month.

• Use a mortgage calculator to get an estimate of a monthly mortgage payment.

• Divide your projected monthly mortgage payment by your monthly gross income to calculate a front-end DTI.

• Divide all your monthly debt payments, including your projected monthly mortgage payment, by your monthly gross income to calculate a back-end DTI.

DTI ratio examples

Say your monthly gross income is $7,000, and each month you owe $350 on a car loan, $250 on student loans and $200 toward credit cards. Your future monthly mortgage payment, including property tax and insurance, is $1,800.

Your front-end DTI would be the monthly mortgage payment divided by monthly gross income.

$1,800 / $7,000 = 0.26 or 26%.

Your back-end DTI would be the monthly mortgage payment plus the other debt payments ($1,800 + $350 + $250 +$200) divided by monthly gross income:

$2,600 / $7,000 = 0.37 or 37%.

» MORE: How to get the best mortgage rates