Last updated: December 2025. This calculator follows standard mortgage underwriting guidelines.
Use this tool to easily determine your Debt-to-Income (DTI) ratio, a crucial metric that mortgage lenders use to assess your ability to manage monthly payments and repay a loan. A lower DTI typically leads to better mortgage rates.
calculating debt to income for mortgage
Your Back-End Debt-to-Income Ratio is:
–%calculating debt to income for mortgage Formula
Back-End DTI Ratio (%) Formula:
$$DTI = \frac{(\text{Housing Payment} + \text{Other Debts})}{\text{Gross Monthly Income}} \times 100$$
Formula Source: CFPB Official Guide to DTI
Variables Explained
- Gross Monthly Income (GMI): Your total earnings before taxes and deductions.
- Total Monthly Housing Payment (PITI): Includes Principal, Interest, Property Taxes, and Homeowner’s Insurance.
- Other Minimum Monthly Debt Payments: Required minimum payments on credit cards, car loans, student loans, and other installment debts.
Related Financial Calculators
- Mortgage Affordability Calculator
- Loan Payment Estimator
- Amortization Schedule Planner
- Closing Cost Projection Tool
What is calculating debt to income for mortgage?
The Debt-to-Income (DTI) ratio is a key financial metric used by mortgage lenders to evaluate a borrower’s capacity to repay a loan. It compares the amount of monthly debt payments to the borrower’s gross monthly income. This ratio is expressed as a percentage.
Lenders typically classify DTI into two types: Front-End DTI (housing costs only) and Back-End DTI (housing costs plus all other minimum monthly debt obligations). The Back-End DTI, calculated above, is the one most commonly referenced for qualifying for a mortgage. While requirements vary, a DTI below 36% is often considered ideal, and most conventional loans cap DTI around 43-45%.
How to Calculate DTI (Example)
- Determine Gross Monthly Income (GMI): If your annual salary is $72,000, your GMI is $72,000 / 12 = $6,000.
- Calculate Total Monthly Debt Payments: Add your proposed housing payment ($1,800) and other minimum debts ($450). Total Debt = $1,800 + $450 = $2,250.
- Apply the Formula: Divide the total monthly debt by the GMI: $2,250 / $6,000 = 0.375.
- Convert to Percentage: Multiply by 100 to get the DTI ratio: $0.375 \times 100 = 37.5\%$.
Frequently Asked Questions (FAQ)
What is a good DTI ratio for a mortgage?
For conventional mortgages, lenders generally prefer a DTI ratio of 36% or lower, though many applicants can qualify with a DTI up to 43% or even 50% for specific loan types (like FHA or VA loans).
How can I improve my DTI ratio?
You can improve your DTI ratio in two primary ways: reducing your monthly debt payments (e.g., paying off car loans, credit cards) or increasing your gross monthly income.
Does DTI include utilities or groceries?
No. The DTI calculation only includes recurring, required minimum payments on installment debt (loans) and revolving debt (credit cards). Discretionary expenses and non-debt recurring costs like utilities, food, and insurance premiums (other than homeowner’s) are excluded.
Is DTI calculated with Gross or Net Income?
DTI is calculated using your Gross Monthly Income (GMI) — your income before taxes, 401k contributions, or other deductions.