DTI (Debt-to-Income) — What It Is and How to Lower Yours
DTI is the single most important number in your mortgage application after FICO. Here's exactly what counts, what doesn't, and how to optimize it.
Debt-to-income ratio (DTI) is your total monthly debt payments divided by your gross monthly income. Lenders use it to decide how much loan you can carry safely.
How it's calculated
Numerator (monthly debt):
- New mortgage payment (PITI = Principal + Interest + Taxes + Insurance + HOA)
- Credit card minimums (NOT balances)
- Car payments
- Student loan payments (or 1% of balance if deferred)
- Alimony / child support
- Personal loan payments
NOT counted:
- Utilities, phone, internet, subscriptions
- Gas, groceries, daycare
- Health/dental insurance premiums (usually)
- 401(k) loans (varies by lender)
Denominator (monthly gross income):
- Base salary ÷ 12
- 2-yr average of bonus, commission, overtime
- Documented rental income (75% of market rent)
- Pension, SS, alimony you RECEIVE
Max DTI by program (2026)
| Program | Max front-end | Max back-end (total) | |---|---|---| | Conventional | 28% | 45-50% with compensating factors | | FHA | 31% | 56.99% with compensating factors | | VA | n/a | 41% (flexible with residual income test) | | Jumbo | 28% | 43% strict | | Non-QM | varies | 50%+ possible |
Three ways to lower DTI fast
1. Pay off small credit cards — A $0 balance card with $0 min payment frees DTI. Even $50/mo helps. 2. Refinance / consolidate a car loan to a longer term — Lower monthly payment = lower DTI even if total cost goes up (sometimes worth it to qualify) 3. Co-borrower with income — Spouse, parent, sibling — their income counts if they're on the loan
What DOESN'T help
- Paying DOWN credit card balances (without closing them — the min payment doesn't change much)
- Moving debt from one card to another
- Asking your boss to write a higher income letter (lender uses YTD paystubs + 2 years)
Tight on DTI? Run a free pre-qual and we'll show you exactly what number you need to hit.