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Debt-to-Income Ratio

Lenders don’t underwrite against your credit score alone — they underwrite against how much of your income is already spoken for.

What Is It

Debt-to-Income Ratio (DTI) is your total monthly debt payments divided by your gross monthly income, expressed as a percentage. It's one of the core numbers lenders actually underwrite against — a high income with equally high monthly obligations can qualify for less than a modest income with very little existing debt.

Why It Matters

The classic guideline, per Cornell Law School's Wex legal dictionary, is that housing costs shouldn't exceed 28% of gross income, and total debt shouldn't exceed 36%. For mortgages specifically, 43% was the ceiling for a "Qualified Mortgage" under the CFPB's original 2014 Ability-to-Repay rule. That specific cap was replaced by a price-based test in 2021, but 43% remains the practical ceiling most lenders and mortgage programs still use today. It's a mortgage-specific figure, not a universal loan limit — auto loans, personal loans, and other credit set their own, typically looser, standards.

Quick Example

A household earning $6,000 a month in gross income with $1,800 in total monthly debt payments has a DTI of 30% — comfortably within the general 36% guideline, and well under the 43% mortgage-qualifying ceiling.

See where your own numbers land:

Gross monthly income
Total monthly debt payments
30% Your DTI

Strong position — within the traditional 36% total-debt guideline.

What's the difference between these two views?

General Guideline uses the classic 28/36 rule of thumb — housing costs at or under 28% of gross income, total debt at or under 36% — still widely cited by lenders and advisors today.

Mortgage Qualifying reflects 43%, the DTI ceiling under the CFPB's original 2014 Qualified Mortgage rule. That specific cap was replaced by a price-based test in 2021, but 43% remains the practical ceiling most lenders and mortgage programs still use. It applies to mortgage underwriting specifically — other loan types set their own, often looser, standards.

This uses your total monthly debt as a single number. Lenders also look at how that debt is split — housing costs specifically matter for the 28% half of the general guideline.

Try It Yourself

Model the monthly payment a new loan would add to your total debt before it changes your DTI.

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Sources & Methodology
For informational purposes only. Not financial advice.