If your mortgage application is declined or your approval comes in lower than expected, there’s a good chance your debt-to-income ratio (DTI) is the issue.
What Is DTI?
DTI is the percentage of your gross monthly income that goes toward debt payments.
There are two types:
Front-end DTI (housing ratio): New housing payment (PITI) ÷ Gross monthly income
Back-end DTI (total debt ratio): (New housing payment + all monthly debt obligations) ÷ Gross monthly income
Lenders look at both, but back-end DTI is most important.
DTI Limits by Loan Type
| Loan Type | Front-End Max | Back-End Max |
|---|---|---|
| Conventional | 28% | 43–45% |
| FHA | 31% | 43–57% |
| VA | No front-end limit | 41% (flexible) |
| Jumbo | 36–38% | 43% |
What Counts as “Debt” in DTI?
Monthly obligations pulled from your credit report:
- Minimum credit card payments
- Car loans
- Student loans (even if in deferment, for FHA)
- Personal loans
- Child support / alimony
- Other mortgage payments
What’s not included: utilities, insurance, subscription services, groceries.
How to Lower Your DTI
- Pay off small debts — Eliminating a $200/month car payment can add $50,000+ to your purchase power
- Increase income — Part-time income from a second job is often usable if you’ve had it for 2+ years
- Don’t take on new debt in the months before applying
- Buy less house — The simplest solution
Student loan note: FHA uses 1% of the outstanding balance as the monthly payment if it’s in deferment. This can dramatically affect FHA qualifying. Conventional uses income-based repayment amounts.
We will calculate your exact DTI in your first conversation and show you clearly where you stand and what adjustments could help.