The DTI formulas
Front-end DTI = monthly housing payment ÷ gross monthly income
Back-end DTI = (housing payment + all other monthly debt payments) ÷ gross monthly income
Count minimum required payments on debts that appear on your credit report, plus court-ordered support. Do not count utilities, insurance other than the home’s, groceries or other living costs.
Worked example
$90,000 income ($7,500.00 a month), a $2,100 housing payment, and $700 in other debts:
| Front-end DTI (2,100 ÷ 7,500) | 28.0% |
|---|---|
| Back-end DTI (2,800 ÷ 7,500) | 37.3% |
The front-end ratio is at the 28% guideline and the back-end ratio is above 36%, but well within the 45% and 50% maximums Fannie Mae permits with compensating factors or automated underwriting.
What lenders look for
- 28% / 36% — the traditional guideline for a comfortable payment.
- 36% — Fannie Mae’s maximum total DTI for manually underwritten loans; up to 45% if credit score and reserve requirements are met.
- 50% — Fannie Mae’s maximum for loans underwritten through Desktop Underwriter.
- Other programs (FHA, VA, USDA) have their own rules.
How to lower your DTI
Pay off small balances entirely (removing a payment helps more than reducing a balance), avoid new credit before applying, add a co-borrower’s income, or choose a less expensive home. The affordability calculator works backwards from DTI to a price.
Frequently asked questions
Is DTI based on gross or net income?
Gross (pre-tax) income.
Do I include rent in DTI when buying?
No. Your current rent is replaced by the proposed housing payment for the home you are buying.