Question 1

What is a good debt-to-income ratio?

Accepted Answer

A back-end DTI of 36% or lower is generally considered healthy. For mortgages, most lenders prefer a back-end DTI under 43%, though some conventional and FHA loans allow up to 50% with strong credit. A front-end (housing) ratio under 28% is ideal.

Question 2

What is the difference between front-end and back-end DTI?

Accepted Answer

Front-end DTI (housing ratio) only counts your housing costs — mortgage principal, interest, taxes and insurance (PITI) plus HOA — divided by gross monthly income. Back-end DTI includes housing plus all other debt payments such as car loans, student loans, minimum credit-card payments and child support.

Question 3

Is debt-to-income calculated using gross or net income?

Accepted Answer

Lenders calculate DTI using your gross (pre-tax) monthly income, not your take-home pay. That is the figure most mortgage and loan qualification standards are based on, which is why this calculator asks for gross income.

Question 4

Can I lower my DTI to qualify for a mortgage?

Accepted Answer

Yes. Pay down or pay off credit cards, avoid new loans before applying, increase your income, or refinance existing debt at lower payments. Even a small reduction can move you below a lender's threshold and improve your rate.