Mortgage Glossary
DTI (Debt-to-Income Ratio)
The percentage of your gross monthly income that goes toward debt payments.
Debt-to-Income ratio (DTI) compares your total monthly debt payments to your gross monthly income. Lenders use it to gauge how much new mortgage debt you can comfortably handle.
There are two ratios: the front-end ratio (housing costs only) and the back-end ratio (all monthly debts including the new mortgage).
Many loan programs look for a back-end DTI at or below 43%–50%, though some programs allow higher with compensating factors.
Frequently asked
What is a good DTI for a mortgage?
A back-end DTI under 43% is generally considered strong, though many programs allow higher ratios with good credit or reserves.
How can I lower my DTI?
Pay down revolving debt, avoid new loans before applying, or increase qualifying income through documentation.