Debt payments of $2,200.00 take 36.67% of your $6,000.00 gross monthly income, above the 36% guideline; Fannie Mae accepts up to 45% on manually underwritten loans only with the credit score and reserves its eligibility matrix requires. Housing alone is 25.00%. To reach 36%, cut payments by $40.00 a month or raise gross income by $111.11 a month.
Back-end DTI against Fannie Mae limits
Gross monthly income
Housing payment25.0%Other debt payments11.7%Left for tax and living costs63.3%
Debt payments and their share of income Rows: 5
Debt
Per month
Share of income
Rent or mortgage payment
$1,500.00
25 %
Car loans and leases
$350.00
5.83 %
Student loans
$250.00
4.17 %
Credit card minimum payments
$100.00
1.67 %
Total
$2,200.00
36.67 %
How it's calculated S
Gross monthly income
6,000.00
Total monthly debt payments
1,500.00+350.00+250.00+100.00=2,200.00
Back-end DTI
6,000.002,200.00×100=36.67%
Front-end (housing) ratio
6,000.001,500.00×100=25.00%
Freddie Mac's guideline for manually underwritten loans is 28%; the CFPB suggests 28% to 35%.
Either change alone reaches the target; a mix of smaller cuts and raises also works.
About the debt-to-income ratio calculator
Your debt-to-income ratio (DTI) is your monthly debt payments divided by gross monthly income. The back-end ratio counts every debt payment, housing included; the front-end ratio counts only the housing payment. Lenders read the back-end figure first: Fannie Mae's maximum is 36% for manually underwritten loans, 45% with credit-score and reserve requirements and 50% through its Desktop Underwriter system.
With the defaults, $6,000 of gross monthly income and $2,200 of debt payments give a back-end DTI of 36.67% and a front-end ratio of 25%. Cutting payments by $40 a month, or earning $111.11 more, brings the back-end ratio to 36%.
Use gross income before tax. Payments count, balances do not: a card with a $4,000 balance and a $100 minimum adds $100. Living costs such as utilities, groceries and insurance other than on the home stay out.
How to calculate your debt-to-income ratio
Add up your monthly debt payments, divide by your gross monthly income and multiply by 100. Payments of 2,200 on income of 6,000 a month give a back-end DTI of 36.67%, and the 1,500 housing payment alone is a 25% front-end ratio. Mortgage lenders use both to decide how much you can borrow.
DTI worked by hand
Take gross income of 6,000 a month and these payments:
rent or mortgage: 1,500
car loan: 350
student loan: 250
credit card minimums: 100
The payments total 2,200, and 2,200 ÷ 6,000 × 100 = 36.67%. That is the back-end ratio. The front-end ratio uses housing alone: 1,500 ÷ 6,000 × 100 = 25%.
Use income before tax. For an annual salary, divide by 12 first: 90,000 a year is 7,500 a month. The CFPB defines the ratio the same way, as monthly debt payments over gross monthly income.
Front-end vs back-end DTI
The front-end ratio, also called the housing ratio, counts only the housing payment. The back-end ratio counts every debt payment, housing included. Lenders read the back-end figure first, and "DTI" on its own usually means it.
What counts as debt in DTI
Count every recurring debt payment:
Housing: rent, or for a mortgage the full payment with property tax, homeowners insurance, HOA dues and mortgage insurance.
Loans: car loans and leases, student loans, personal loans.
Credit cards: the minimum due on each statement, not the balance or what you choose to pay.
Support: child support and alimony you pay.
Other obligations: any other recurring payment on your credit report or a court order.
Payments count and balances do not: a card with a 4,000 balance and a 100 minimum adds 100. Utilities, groceries and insurance other than on the home stay out.
What is a good debt-to-income ratio?
The CFPB suggests keeping all debt payments at 36% of gross income or less and housing at 28% to 35%. Mortgage limits for the back-end ratio, from Fannie Mae's Selling Guide:
36% or less: within Fannie Mae's maximum for manually underwritten loans.
Over 36%, up to 45%: accepted on manually underwritten loans only with the credit score and reserves its eligibility matrix requires.
Over 45%, up to 50%: only loans approved through Desktop Underwriter.
Over 50%: above Fannie Mae's maximum, so a Fannie Mae loan is out of reach until the ratio falls.
Each band includes its upper edge, so exactly 36% is in the first. FHA manual underwriting uses 31% for housing and 43% in total without compensating factors (HUD Handbook 4000.1).
DTI examples
Scenario
Back-end DTI (%)
Housing allowance at target
Default
36.67
1460.00
Forty-five percent
45.00
950.00
Annual income
33.33
2300.00
The housing allowance is the largest housing payment that keeps the back-end ratio at a 36% target: target × income − other debts. For Default, the example above, that is 36% × 6,000 − 700 = 1,460.
Forty-five percent has 5,000 of income, 1,400 of housing, a 450 car payment, 300 of student loans and a 100 card minimum. Annual income is 90,000 a year with 2,100 of housing and a 400 car payment: 2,500 ÷ 7,500 = 33.33%.
The allowance replaces the current housing payment; it is not room for a second one. At a 43% target the first example allows 1,880, at 45% 2,000 and at 50% 2,300.
How to lower your DTI
At a target ratio, payments can be at most target × income, and the income needed is payments ÷ target.
Cut payments: 36% × 6,000 = 2,160, so the first example needs 40 a month less in payments.
Raise income: 2,200 ÷ 0.36 = 6,111.11, so income must rise by 111.11 a month.
Pay off a loan: clearing the 250 student loan removes its whole payment and drops DTI to 32.5%.
Pay down a card: this helps only when it lowers the minimum payment.
For the 45% example, reaching 36% takes cutting payments by 450 or raising income by 1,250 a month.
Mistakes that skew DTI
Using take-home pay. DTI uses income before tax; dividing by net pay overstates it.
Entering balances. A 20,000 student loan balance is not a 20,000 monthly debt; use its payment.
Counting a payment twice, such as a car lease listed as both a car payment and another obligation.
Using today's rent for a mortgage application. Lenders use the payment on the home you are buying.
Mixing periods. Payments are monthly; convert yearly income to monthly before dividing.
Add up your monthly debt payments and divide by your gross monthly income, then multiply by 100. The CFPB's example: a $1,500 mortgage payment, a $100 auto loan and $400 of other debts total $2,000; on $6,000 of gross monthly income the DTI is 33%. The front-end ratio uses only the housing payment, 25% here.
What is a good debt-to-income ratio?
36% or less. The CFPB suggests keeping total debt payments at 36% of gross income or below and housing at 28% to 35%, and Freddie Mac's guideline for manually underwritten loans is 28% for housing and 36% in total. Fannie Mae accepts up to 45% with credit-score and reserve requirements and up to 50% through Desktop Underwriter.
What is the maximum DTI for a mortgage?
50% for a conventional loan approved through Fannie Mae's Desktop Underwriter, and 45% for a manually underwritten one that meets the credit-score and reserve requirements (Selling Guide B3-6-02). FHA's manual-underwriting limits without compensating factors are 31% for housing and 43% in total. The CFPB notes some lenders go to 43% or higher.
How can I lower my debt-to-income ratio?
Cut monthly payments or raise gross income. To reach a target, the most your debts can be is target × income, and the income you need is debts ÷ target. With $2,250 of payments on $5,000 a month (45%), reaching 36% takes cutting payments by $450 or raising income by $1,250 a month. Paying off a loan outright removes its whole payment, which usually moves the ratio fastest.
For planning only. Lenders, tax authorities and markets apply their own rounding, fees and rules; confirm figures with them before you commit.
Checked against references
This calculator includes 5 worked examples with independently sourced answers. They run in the test suite, and you can run them here too.
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