Front-end vs back-end DTI
Front-end DTI is your housing payment (principal, interest, taxes, insurance and HOA) divided by gross monthly income. Back-end DTI adds every other monthly debt payment to the housing payment. Lenders look at both, but the back-end ratio usually matters more.
DTI = monthly debt payments / gross monthly income × 100
Example
With a $90,000 yearly income ($7,500 a month), a $2,000 housing payment and $750 in other monthly debts, the front-end DTI is 26.7% and the back-end DTI is 36.7%.
Typical DTI guidelines
- Conventional loans: 28% front-end and 36% back-end is the classic guideline; many lenders accept up to 45% or more with strong credit.
- FHA loans: 31% front-end and 43% back-end as a standard, with higher ratios possible in some cases.
- VA loans: 41% back-end is the main guideline, together with a residual income test.
Exact limits depend on the lender, your credit score, savings and down payment.
Frequently asked questions
What is a good DTI ratio?
A back-end ratio of 36% or less is generally seen as good. Many lenders approve loans up to 43%, and some programs go up to 50% with strong credit or savings.
What is not counted as debt?
Utilities, phone bills, insurance premiums other than home insurance, groceries and other living costs.
How can I lower my DTI?
Pay down revolving debt, avoid new loans before applying, add a co-borrower's income or choose a less expensive home. Check your budget with the home affordability calculator.