Understanding DTI Ratios
What lenders look for when approving mortgages
DTI Ratio Categories
Excellent
Best rates, most options
Good
Easily qualified
Acceptable
QM limit, may need compensating factors
High
Difficult to qualify
Front-End DTI
28%
Target maximum for housing costs only
- • Mortgage payment
- • Property taxes
- • Homeowners insurance
- • HOA fees
Back-End DTI
43%
Maximum for QM mortgages (all debt)
- • Housing + all other debts
- • Car loans
- • Student loans
- • Credit card minimums
How to Lower Your DTI
Pay down existing debt
Increase your income
Avoid new debt before applying
Pay off small balances entirely
Refinance to lower payments
Consider a less expensive home
What Counts as Debt?
Included ✓
- • Mortgage/Rent
- • Car Loan
- • Student Loans
- • Credit Cards
- • Personal Loans
- • Child Support/Alimony
Not Included ✗
- • Utilities
- • Food & groceries
- • Entertainment
- • Health insurance
- • Cell phone bills
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Based on CFPB Qualified Mortgage standards and lender guidelines 2026