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Debt to Income Ratios

Debt to Income Ratios

Debt-to-income

Your debt-to-income ratio, explained.

DTI is the share of your gross monthly income that goes to debt. It’s one of the first numbers a lender looks at.

Calculate my DTI What can I afford?

DTI calculator

Work out your ratios.

Total (back-end) DTI

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Housing (front-end) DTI
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Room left before 43%
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Many programs look for a total DTI of about 43% to 50%, depending on the program, credit and reserves. Estimates for planning only, not a loan offer. Your actual rate, payment and costs depend on the lender, program, property and your full application.

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How it works

Two ratios, one question: can the payment be carried?

Front-end ratio

Your new housing payment divided by your gross monthly income. The housing payment includes principal, interest, property tax, homeowners insurance, HOA or condo fees and any mortgage insurance.

Back-end ratio

The housing payment plus your other monthly debts, divided by gross monthly income. Other debts include car loans, student loans, minimum card payments, child support and alimony. Utilities, phone bills and groceries don’t count.

Example

Gross income of $10,000 a month, a $3,200 housing payment and $500 of other debts give a front-end ratio of 32% and a back-end ratio of 37%.

If your ratio is high

Paying off a small debt, adding a co-borrower’s income, a larger down payment or a lower price all bring it down. Strong credit and cash reserves can also help a lender accept a higher ratio. Ask us before you move money around.

Not sure how a lender will count your income?

We’ll review it with you. Or call 305-933-1626 to talk it through.

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