What is a good debt-to-income ratio?

Conventional mortgages still underwrite to about 28% housing (front-end) and 36% all debts (back-end) of gross monthly income. Many automated underwrites approve higher with compensating factors, but 36% back-end is the number you should plan around if you want a clean file.

What debts count in DTI?

The proposed housing payment (PITI plus HOA and mortgage insurance) plus minimums on installment loans, credit cards, auto loans, student loans, alimony, and child support. Utilities, groceries, and 401(k) deferrals do not sit in the DTI fraction — but 401(k) lowers the income in the denominator if it is pretax.

Does a 401(k) loan count toward DTI?

Usually yes if payments are reported on the credit file or the lender can see payroll withholding. Treat a 401(k) loan payment as a monthly debt until it is gone.

How do student loans count if I am on an IDR plan?

FHA, VA, and USDA generally use the documented IDR payment. Conventional (Fannie/Freddie) often uses the IDR payment if it is above $0; a $0 IDR payment is frequently recast as 0.5% of the outstanding balance. Confirm with your loan officer — this is the most common surprise on a first-home file.

How can I lower my DTI fast?

Raise documented gross income, or kill a monthly payment entirely (pay off a car or a card so the tradeline shows $0). Paying a card down without closing the payment does almost nothing for DTI — underwriters use the minimum payment, not the balance. A 90-day plan lives in the PayPal playbook.

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Debt-to-income ratio: how lenders actually qualify you

Google “how much house can I afford” and you get a payment. Lenders do not buy a payment. They buy a ratio of monthly debts to gross income. That ratio is DTI, and it is why two households with the same salary get different loan sizes.

Updated 2026-09-08 · 9 min read · Educational, not a pre-approval. Run the DTI calculator with your numbers.

Two ratios, not one

Front-end (housing) DTI is PITI — principal, interest, taxes, insurance — plus HOA and mortgage insurance, divided by gross monthly income. Back-end (total) DTI is housing plus every other monthly debt the credit report and application show. Back-end is the one that kills files.

Front-end

Housing / gross

The payment you will make on this house. Conventional target: 28%.

Back-end

All debts / gross

Housing plus cars, cards, students, support. Conventional target: 36%.

2026 underwriting snapshots

Automated underwriting can stretch these. Compensating factors (reserves, credit score, leftover income) matter. Plan to the published ceilings anyway — stretching DTI is how a rate lock turns into mortgage insurance, a price adjustment, or a denial two days before closing.

Program	Front-end	Back-end	Notes
Conventional (Fannie/Freddie)	~28%	~36%	Desktop Underwriter / Loan Product Advisor may go higher with score + reserves.
FHA	~31%	~43%	Can stretch with compensating factors; mortgage insurance is not optional.
VA	—	~41% guideline	Residual income (cash leftover after debts) often matters more than the ratio.
USDA	~29%	~41%	Income limits and rural-area maps apply on top of DTI.

Related: how much house · HELOC vs cash-out · how much rent · PMI.

What counts, and what does not

Counts: the new PITI, HOA, mortgage insurance, auto loans, personal loans, credit-card minimums, student-loan payment (see IDR trap), alimony, child support, 401(k) loan payments the lender can see.
Does not count: utilities, cell phone, groceries, childcare (unless court-ordered), 401(k) deferrals, HSA, and most insurance premiums. Those still eat cash. They just are not in the fraction.
Income: gross, not take-home. Overtime, bonus, and gig income usually need a two-year average and a likely-to-continue letter. A new job under 30 days can stall the file.

Pretax 401(k) and HSA do not sit in the numerator, but they shrink take-home. That is why a household can “qualify” on paper and still fail a real budget. Pair this page with the 2026 paycheck estimator before you shop.

The student-loan landmine

If you are on income-driven repayment and the billed payment is $0, many conventional files recast the debt as 0.5% of the outstanding balance per month. A $60,000 balance becomes a $300 DTI line you did not budget. FHA and VA are more likely to use the documented IDR payment. Ask the loan officer which rule they will run before you spend money on an appraisal. Payment vs recast vs RAP/IBR: IDR vs refinance calculator — this page will not duplicate that math.

How to lower DTI without lighting the emergency fund

Paying a card from $4,000 to $1,000 barely moves DTI. The underwriter uses the minimum payment, which barely fell. Paying the card to $0 so the payment disappears does. Same with a car: extra principal is for interest math; payoff is for DTI math. See snowball vs avalanche for which debt to kill first when the goal is a mortgage, not lifetime interest.

The other lever is income: a documented raise, a second borrower, or a side gig with two years of returns. Authorized-user tradelines can help credit score. They do not add the other person’s income to your DTI.

DTI is not a budget

36% of gross on a $90,000 salary is $2,700 a month in debts. After tax, that can be half of take-home. A lender who says yes is not saying you will like the life. Size the house with leftover money after a 3–6 month emergency fund and the 401(k) match — then see if DTI still clears. The PayPal playbook is the 90-day sequence if you are close and the file is not.

Free tool

DTI calculator

Front-end, back-end, leftover payment room, shareable URL.

PayPal

90-day DTI cut plan

Which payment to kill, what to document, when to wait.

Not a loan offer. Program overlays change. Confirm with a licensed loan officer. Premium restore: /account.