What is Debt-to-Income Ratio (DTI)?
Category: Definitions
Your Debt-to-Income (DTI) ratio is the percentage of your gross monthly income that goes toward paying your recurring monthly debts.
How to Calculate DTI
To calculate your total (back-end) DTI:
DTI = (Total Monthly Debt Payments / Gross Monthly Income) × 100
- Total Monthly Debt Payments: Includes your proposed mortgage payment (PITI), minimum credit card payments, student loans, car loans, and child support. It does not include living expenses like utilities, groceries, or health insurance.
- Gross Monthly Income: Your total income before taxes and deductions.
Why DTI Matters
Lenders use DTI as a risk indicator. A lower DTI means less of your income is committed to debt payments. Higher DTI ratios can make it harder to qualify for some mortgages, though thresholds vary by lender and loan program. Explore selected DTI assumptions using the Affordability Calculator.