DTI: the one ratio that approves or kills your file.
Rates get the headlines, but debt-to-income decides approvals. Here is exactly how underwriters compute it, where the caps sit, and how to move yours before it matters.
MA
Reviewed by Moh Alloo, Mortgage Loan Originator · NMLS #2732105 · West Capital Lending Updated July 6, 2026
The formula
DTI = total monthly debt payments ÷ gross monthly income. Underwriters care most about the "back-end" ratio, which includes your full future housing payment (principal, interest, taxes, insurance, HOA) plus every other monthly obligation on your credit report.
Worked example: $12,000/month gross income. Future housing payment $3,750, car $450, student loans $320, card minimums $180 → $4,700 total. DTI = 4,700 ÷ 12,000 = 39% — comfortably approvable on most programs.
What counts (and what doesn’t)
Counts
Doesn’t count
Future PITIA on the new home
Utilities, phone, streaming
Car loans and leases
Groceries, gas, insurance (non-property)
Student loans (even in deferral — programs impute a payment)
401(k) loan repayments (usually)
Credit-card minimums, not balances
Debts with ≤10 payments left (often excludable)
Child support / alimony obligations
Bills you split informally
Where the caps sit
43%: the classic qualified-mortgage benchmark; the safest zone on any program.
45–50%: conventional approvals run here every day with compensating factors (reserves, credit, down payment). FHA can stretch further with strong factors.
Over 50%: most consumer programs cap out. The workarounds are structural: more down, a cheaper target, paying off a tradeline — or a product that doesn’t use personal DTI at all (DSCR for investment property).
Fastest ways to lower DTI
Pay off (not down) a monthly obligation. Killing a $450/month car payment cuts DTI more than $20,000 of extra down payment on most files.
Restructure student loans — an income-driven plan with a documented lower payment counts at the lower figure on many programs.
Don’t finance anything new between pre-approval and closing. New payments are discovered at the pre-closing credit refresh, and deals die there.
Count all your income — bonuses, RSUs with history, a second job with a 2-year track record, documented rental income. Underwriters only count what you show.
If W-2 math isn’t your problem
Self-employed borrowers whose tax returns undersell them aren’t stuck with the DTI their Schedule C implies — bank-statement programs qualify on deposits. And investment property qualifies on the property’s own rent via DSCR, ignoring personal DTI entirely.
Price your scenario in minutes
The pricer asks income and monthly debts up front and shows your estimated DTI live as you set the numbers. No documents, no login — live indicative pricing as you answer, then a licensed loan officer reviews your exact scenario.
Under 43% is comfortable on nearly every program. Conventional routinely approves to 45–50% with compensating factors like reserves and strong credit. Over 50%, options narrow to restructuring the file or non-DTI products.
Do credit card balances count against DTI, or just minimums?
Only the minimum monthly payments count. Balances affect your credit utilization and score, which affects pricing — but DTI itself uses the minimum payment.
Do student loans in deferral count?
Yes on most programs — if the report shows $0, underwriters impute a payment (commonly 0.5–1% of balance monthly, program-dependent). A documented income-driven payment can count at the lower real figure.
Does my spouse’s debt count if they’re not on the loan?
In common-law states, no — only borrowers on the application. In community-property states, FHA and VA count a non-borrowing spouse’s debts; conventional generally does not.
What if my DTI is too high?
In order of speed: pay off a monthly tradeline at or before closing, extend the loan term, put more down or aim cheaper, document additional income — or use a product that qualifies differently, like bank-statement (self-employed) or DSCR (investment property).