How it’s calculated
The Consumer Financial Protection Bureau defines your debt-to-income ratio as all your monthly debt payments divided by your gross monthly income. Lenders use it to judge whether you can manage another payment.
Example (CFPB): a $1,500 mortgage, $100 auto loan and $400 of other debts make $2,000 a month. With $6,000 gross monthly income, DTI = 2,000 ÷ 6,000 = 33%.
| DTI | What it usually means |
|---|---|
| 36% or less | A common lender guideline for comfortable borrowing |
| 36–43% | Often still approvable, with more scrutiny |
| Over 43% | Above the limit the CFPB historically set for a standard Qualified Mortgage |
Thresholds differ by lender and loan program, and the Qualified Mortgage rules have since moved to price-based limits. Everyday costs like utilities, groceries and insurance are not debts and are not included.
Frequently asked questions
Is DTI based on gross or take-home pay?
Gross income: what you earn before taxes and other deductions.
Do I include utilities or phone bills?
No. DTI counts debt payments (mortgage or rent, loans, credit card minimums, and court-ordered payments such as child support), not living expenses.
How can I lower my DTI?
Pay down debt (especially small balances with high payments), avoid new borrowing before applying, or increase income. Refinancing to a lower payment also reduces it.
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Sources
- What is a debt-to-income ratio? — Consumer Financial Protection Bureau
- Qualified Mortgages: what are they and what do they mean for you? (43% DTI) — Consumer Financial Protection Bureau
Formulas are taken from the free public references above. Results are provided “as is” for informational and educational purposes only. See our disclaimer.
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