How DTI is calculated
Front-end DTI = housing payment / gross monthly income. Back-end DTI = housing payment + other monthly debts + proposed new payment, divided by gross monthly income.
Example
If gross monthly income is $5,000, housing payment is $1,400 and other monthly debts are $450, front-end DTI is 28% and back-end DTI is 37%. Adding a proposed $250 payment would raise back-end DTI to 42%.
Common mistakes
Use gross income, not take-home pay, when you want to match how many lenders calculate DTI. Do not include groceries or utilities unless a specific lender asks for them.
What to include
Common debt inputs include mortgage or rent payment, car loans, student loans, credit card minimum payments, personal loans and other required recurring debt payments. Food, utilities and discretionary spending are usually budget items rather than DTI debts, but lender rules vary.
How to interpret the ratio
DTI is a screening ratio, not loan approval. A lower ratio usually means more income remains after debt payments, but lenders can also consider verified income, credit score, assets, loan type, country-specific rules and underwriting overlays that are not included here.
References
- Consumer Financial Protection Bureau: mortgage tools, accessed 2026-05-16.
Last reviewed: 2026-05-16