Examples
Default household
Formula
Front-end DTI = monthly housing costs ÷ gross monthly income. Back-end DTI = all monthly debt payments ÷ gross monthly income.Check the inputs before comparing ratios
- Enter gross income before tax and choose Per month or Per year for each income source. The calculator converts annual amounts to monthly amounts.
- Enter required debt payments, not the total balances outstanding. For example, a $10,000 auto-loan balance with a $250 payment belongs here as $250 per month.
- Avoid counting housing costs twice. If your mortgage amount already includes property tax and insurance, separate those amounts before also filling their fields.
- Model the housing you want to evaluate consistently. Adding current rent and a proposed mortgage together answers a different question from replacing rent with the proposed mortgage.
In the example above, $60,000 ÷ 12 = $5,000 gross monthly income and
$1,200 + $200 + $250 = $1,650 monthly obligations. Thus back-end DTI is
$1,650 ÷ $5,000 × 100 = 33%. If the auto payment ends and everything else
stays the same, it becomes $1,400 ÷ $5,000 × 100 = 28%. This is an arithmetic
scenario, not a prediction of a lender’s decision.
The CFPB’s explanation of DTI uses monthly debt payments divided by gross monthly income and explains that limits vary by lender and loan product. There is no single approval cutoff that applies to every borrower.
Read the housing estimates carefully
The assessment labels are broad calculator bands, not underwriting decisions. The Potential New Housing Budget uses an illustrative 36% total-DTI target minus non-housing debt. The Estimated Affordable House Value then assumes a 30-year mortgage at a fixed 6.968%, 20% down, and annual housing costs equal to 2% of the property value. That rate is a stored scenario, not a current market quote; the result is not a lender offer.
Use the House Affordability Calculator to enter your own financing assumptions. Use the Budget Calculator to consider taxes and everyday expenses that a DTI ratio does not capture.
What this ratio leaves out
The calculator annualizes the entered gross income and divides the listed recurring payments by it. Lenders can define qualifying income, housing expense, and recurring debt differently and may include obligations not shown here. DTI alone does not determine approval, affordability, interest rate, or the cash left after taxes and living expenses. Use lender disclosures and a full budget for those questions.