DTI Calculator

DTI thresholds by loan type

What counts as debt and what doesn't

Lenders count debt that appears on your credit report and represents a recurring obligation: mortgage or rent (current rent only if you're staying, not if you're moving), car loans and leases, student loans (even if deferred, they'll use 1% of balance or your actual income-driven payment), credit card minimums (using actual statement minimums), personal loans, alimony, and child support. Co-signed debts count even if someone else makes the payments.

What doesn't count: utilities, cell phone, insurance premiums (except as part of PITI in housing), groceries, gas, daycare, 401(k) loans (you owe yourself), and any debt with fewer than 10 remaining payments at the time of application. That last one is a tactical lever, pay down a car loan to less than 10 months remaining and the entire payment vanishes from your DTI calculation.

Income side has its own rules. Base salary and consistent overtime are easy. Bonus and commission income require a 2-year history and use a 24-month average. Self-employment income looks at net (after expenses) on tax returns averaged over 2 years, meaning aggressive write-offs that lowered taxable income now lower your borrowing capacity. Rental income from existing properties counts at 75% of gross rents (the 25% haircut covers vacancy and maintenance).

Worked example: how much house can you actually afford

A household with $9,000 gross monthly income, $450 car payment, $200 student loans, $100 credit card minimums has $750 in non-housing debt. To stay at 43% total DTI, max total debt is $3,870, leaving $3,120 for PITI (principal, interest, taxes, insurance). At 2026 average 30-year mortgage rates around 6.5%, factoring in property taxes (~1% annually) and homeowner's insurance, the household can afford a home around $440,000-$465,000 depending on tax rate and PMI requirements.

Pay off that $450 car loan and the picture shifts dramatically: now $3,570 is available for PITI, supporting roughly $510,000 in home price, about $50,000 more house. Conversely, taking on a new $400 car loan during the application process can drop affordability by $45,000+ on the same income. This is why mortgage lenders explicitly warn against opening new credit or large purchases during underwriting.

The 28/36 rule (front-end max 28%, back-end max 36%) is the old conservative guideline that still produces the safest borrowers. Modern qualifying ratios are looser, 43% back-end conventional with possible 50% exceptions, FHA up to 56.9% with compensating factors. But qualifying for a higher payment and being able to afford it comfortably are different questions. The 28/36 borrower has slack for emergencies; the 50% DTI borrower lives one major repair away from trouble.

Five ways to improve DTI before applying

• Pay off small debts first: A $200/month credit card with $1,800 balance contributes more to DTI than its size suggests. Killing it raises affordability by $30,000+ in home price.
• Refinance high-payment debts: A 4-year car loan refinanced to 7 years cuts the payment by 30-40%, reducing DTI on paper (but costing more in total interest). Useful when the trade-off is qualifying or not.
• Add a co-borrower: A spouse, partner, or family member's income gets added to total income, often lowering DTI dramatically. Their debts also get added, so the math depends on their balance sheet.
• Use the right student loan calculation: Federal income-driven repayment plans can produce very low official payments. FHA and VA accept the actual income-driven payment; conventional requires 1% of balance or actual payment, whichever is higher.
• Avoid new debt 6 months pre-application: Opening a credit card, buying a car, or financing furniture in the 6 months before applying changes your DTI and your credit utilization. Both can lower your loan amount or your rate.

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