What lenders actually see when you apply for a mortgage.
Walk into any mortgage office and the conversation will eventually turn to a single number: your debt-to-income ratio. Loan officers will look at it, the underwriter will look at it, the algorithm running in the background will look at it. It's the closest thing to a yes-or-no gate in the entire mortgage process.
And most people have never calculated theirs.
The 43% line
After the 2008 financial crisis, Congress passed the Dodd-Frank Act, which created something called the Qualified Mortgage rule. Buried in that rule is a single threshold: lenders who want their loans to qualify for federal protections can't approve mortgages where the borrower's DTI exceeds 43%.
So that's the line. Above 43%, you can technically still get a mortgage, but most major banks won't touch it. The ones that will charge higher rates and demand bigger down payments to offset the risk.
Below 43%, things open up. Below 36%, you start getting the best rates banks offer. Below 28% on housing alone — what lenders call "front-end DTI" — you're in the territory where they actively want your business.
What counts as debt
This is where most people get tripped up. The "debt" in DTI isn't all your bills — it's specifically the recurring payments on borrowed money. So:
Counted: rent or mortgage, credit card minimum payments, auto loans, student loans (even if deferred — lenders use 1% of the balance as the assumed payment), personal loans, alimony, child support.
Not counted: groceries, utilities, gas, health insurance, internet, phone bills, streaming services, gym memberships. Lenders don't care about your Netflix subscription. They care about contractual debt obligations.
The gross income trap
The income half of the equation is your gross monthly income — what you earn before taxes, retirement contributions, and health insurance come out. Not what hits your bank account. This always feels weird the first time you calculate it, because the number that matters for DTI is bigger than the money you actually see.
If you're salaried, divide your annual salary by 12. If you're hourly, multiply your hourly rate by your average weekly hours, then by 52, then divide by 12. If you're paid biweekly, multiply your paycheck by 26 and divide by 12 (or roughly multiply by 2.17 — same answer).
If your DTI is too high
You have two levers, and only two: lower the top number, or raise the bottom one. Pay down debt — the snowball or avalanche method can help — or increase income through a raise, side work, or job change. Most people focus on cutting expenses, but expenses don't move DTI. Only debt payments do.
One quick win: if you have credit card debt with a high minimum, pay down a chunk of the balance. The minimum payment will drop with it, which immediately lowers your DTI. This is the single fastest way to move the number before applying for a mortgage.
About the calculation
This calculator uses the standard back-end DTI formula defined by the CFPB and codified in the federal Qualified Mortgage rule (12 CFR §1026.43): total monthly debt obligations divided by gross monthly income, expressed as a percentage. The 36% and 43% thresholds match the federal QM standard. Your individual lender may apply different thresholds for specific loan products — VA, FHA, and jumbo loans all have their own rules — but the back-end DTI itself is calculated the same way everywhere.