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

An ideal DTI ratio for a mortgage is under 36%, but you can qualify with more.

Barbara Marquand
Chris Jennings
Michelle Blackford
Updated
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 2024, 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. 
  • Determine your monthly debt payments, including loans, credit cards, alimony and child support. For credit cards, use the minimum payment due, even if you typically pay more.
  • 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

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What is a good DTI ratio?

An excellent target for a front-end DTI ratio is below 28%, and a good target for a back-end DTI is below 36%.
You can qualify for a mortgage with a higher DTI, but you may pay more interest and have to meet other criteria to offset it. The DTI limit will vary by the lender and type of mortgage.
Keep your DTIs as low as possible, regardless of lenders’ limits. Paying down debt will help improve your credit score, and a higher credit score and lower DTI ratio will help you get a better mortgage interest rate.
» MORE: The best lenders for low credit score borrowers

DTI ratios by mortgage type

Here are general DTI thresholds for manually underwritten conventional and government-backed mortgages. You may be able to exceed these limits if you have strong compensating factors, like high cash reserves or a significant down payment, to balance out the risk.
Conventional loans
  • Front-end: 36%
  • Back-end: 45%
» MORE: Review conventional loan eligibility requirements
FHA loans
  • Front-end: 31%
  • Back-end: 43%
» MORE: Review FHA loan eligibility requirements
USDA loans
  • Front-end: 29%
  • Back-end: 41%
» MORE: Best USDA lenders
VA loans
  • Front-end: Not applicable
  • Back-end: 41%
» MORE: Review VA loan eligibility requirements

DTI isn't a full measure of affordability

Although your DTI ratio is important when getting a mortgage, the number doesn't tell the whole story about what you can afford.
DTIs leave out everyday costs like food, health insurance, utilities, gas and entertainment. They also use your pre-tax income, not what you actually take home each month.
You’ll want to consider more than what your DTI labels as “affordable” and compare all of your expenses with your actual take-home income.
» MORE: How much house can you afford?

If your DTI is high

The higher your DTI ratio, the more likely you are to struggle to qualify for a mortgage and make your monthly mortgage payments. If your DTI ratio is working against you, the following strategies can help you bring it down.

Pay off debt

Pay off as much of your current debt as possible before applying for a mortgage. In most cases, lenders won’t include installment debts like car or student loan payments as part of your DTI if you have just a few months left to pay them off.
» MORE: Tips for paying off debt

Avoid taking on more debt

Don't make any big purchases on credit cards before you buy a home. Taking on new debt can increase your DTI ratio and reduce the amount a lender is willing to let you borrow.

Wait to apply

If your debt-to-income ratio is exceptionally high — say 50% or more — wait to make a home purchase until you've reduced the ratio.
Use a mortgage calculator to help you figure out a reasonable mortgage payment before sitting down with a lender.
The lower your debt-to-income ratio, the safer you are to lenders — and the better your finances will be.
NerdWallet writer Isabella Angelos contributed to this story.

Mortgage loans from our partners

NBKC

at NBKC

NBKC
4.5
NerdWallet rating
Min. credit score

620

Min. down payment

3%

New American Funding

at New American Funding

New American Funding
4.0
NerdWallet rating
Min. credit score

N/A

Min. down payment

0%

GO Mortgage

at GO Mortgage

GO Mortgage
4.0
NerdWallet rating
Min. credit score

620

Min. down payment

3%

COMPARE MORE LENDERS
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