How to calculate DTI
Lenders usually look at two versions:
- Front-end (housing) ratio: just the new housing payment (principal, interest, property taxes, homeowners insurance, mortgage insurance and HOA dues) divided by income.
- Back-end (total) ratio: the housing payment plus other monthly debts: car loans, student loans, minimum credit card payments, personal loans, and any required alimony or child support.
Everyday bills like groceries, utilities and phone plans aren't counted.
Worked example
Gross income $8,000 a month. New housing payment $2,000. Car payment $400, student loan $150, card minimums $50.
Back-end = ($2,000 + $600) ÷ $8,000 = 32.5%
Check yours with the debt-to-income calculator, or work backward from a target ratio with the income needed for a mortgage calculator.
DTI limits by loan type
| Loan type | Limit | Notes |
|---|---|---|
| Conventional (Fannie Mae), manually underwritten | 36% total DTI | Up to 45% if credit score and reserve requirements in Fannie Mae's Eligibility Matrix are met |
| Conventional (Fannie Mae), Desktop Underwriter | 50% total DTI | The automated system weighs the whole file |
| FHA, manually underwritten, no compensating factors | 31% housing / 43% total | Also the cap for scores below 580 |
| FHA, manual, one compensating factor (score 580+) | 37% / 47% | For example, cash reserves of at least three monthly payments |
| FHA, manual, two compensating factors (580+) | 40% / 50% | |
| FHA, manual, no discretionary debt (580+) | 40% / 40% | |
| VA | 41% total as the standard | Above 41% needs justification unless residual income beats the guideline by at least 20% |
Fannie Mae uses one total DTI; it doesn't set a separate front-end limit. Its DTI includes the full housing payment (PITIA), installment and revolving debts, leases, certain alimony or child support, and any net rental loss.
VA residual income
VA also checks whether enough money is left each month for living expenses after the housing payment and other debts. For loans of $80,000 and up, the monthly minimums are:
| Family size | Northeast | Midwest | South | West |
|---|---|---|---|---|
| 1 | $450 | $441 | $441 | $491 |
| 2 | $755 | $738 | $738 | $823 |
| 3 | $909 | $889 | $889 | $990 |
| 4 | $1,025 | $1,003 | $1,003 | $1,117 |
| 5 | $1,062 | $1,039 | $1,039 | $1,158 |
Add $80 for each additional family member, up to a family of seven. See the VA loan calculator.
What is a healthy debt-to-income ratio?
There's no single official "healthy" number. The limits above are the most a program allows, not a target. A lower ratio leaves more room for savings, repairs and surprises, and can help you qualify for better terms. If yours is high, paying down a car loan or card balance before applying lowers it fastest, because the minimum payment disappears entirely. Test what you can afford with the home affordability calculator.
Sources: Fannie Mae Selling Guide B3-6-02; HUD Mortgagee Letter 2014-02 (FHA manual underwriting ratios); 38 CFR 36.4340 (VA underwriting standards); CFPB: key mortgage terms.
Every worked example on this page was checked with Calcist's own engine and an independent reference.