What is a good Debt-to-Income (DTI) ratio?

Lenders generally consider a DTI of 36% or less to be ideal. A DTI between 37% and 43% is often manageable, but may result in less favorable loan terms. A DTI over 43% is considered high risk, and many lenders will not approve a mortgage. The Consumer Financial Protection Bureau (CFPB) identifies 43% as the highest DTI a borrower can have and still get a Qualified Mortgage.

What is the difference between front-end and back-end DTI?

Front-end DTI (or 'housing ratio') only includes your housing-related expenses (mortgage principal, interest, taxes, and insurance) as a percentage of your gross income. Back-end DTI includes *all* your monthly debt payments (housing, car loans, student loans, credit cards, etc.) as a percentage of your gross income. Lenders place more emphasis on the back-end DTI.

How can I lower my DTI ratio?

There are two primary ways to lower your DTI: 1. Increase your gross monthly income (e.g., side hustle, raise). 2. Decrease your monthly debt payments (e.g., pay off loans, reduce credit card balances). Paying off a small loan in full can have a significant impact by eliminating its monthly payment from the calculation.

Do lenders only look at DTI?

No. DTI is a critical factor, but lenders also conduct a holistic review of your finances, including your credit score, credit history, savings (cash reserves), and the size of your down payment.

Should I use my gross income or net (take-home) income?

Always use your **gross monthly income** (your total earnings before any taxes or deductions are taken out). This is the standard figure lenders use for their calculations.

Debt to Income Ratio (DTI) Calculator

Audit: Complete

Formula (LaTeX) + variables + units

This section shows the formulas used by the calculator engine, plus variable definitions and units.

Formula (extracted text)

$ \text{Front-End DTI} = \left( \frac{\text{Total Monthly Housing Payment}}{\text{Gross Monthly Income}} \right) \times 100 $

Formula (extracted text)

$ \text{Back-End DTI} = \left( \frac{\text{Total Monthly Debt Payments}}{\text{Gross Monthly Income}} \right) \times 100 $

Variables and units

P = principal (loan amount) (currency)
r = periodic interest rate (annual rate ÷ payments per year) (1)
n = total number of payments (years × payments per year) (count)
M = periodic payment for principal + interest (currency)
T = property tax (annual or monthly depending on input) (currency)
I = homeowners insurance (annual or monthly depending on input) (currency)

Sources (authoritative):

consumerfinance.gov — consumerfinance.gov · Accessed 2026-01-19
https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-to-income-ratio-en-1791/
Home — calcdomain.com · Accessed 2026-01-19
https://calcdomain.com/
Finance — calcdomain.com · Accessed 2026-01-19
https://calcdomain.com/finance
Business & Small Biz — calcdomain.com · Accessed 2026-01-19
https://calcdomain.com/subcategories/business-small-biz
Loan Amortization Calculator — calcdomain.com · Accessed 2026-01-19
https://calcdomain.com/loan-amortization
Mortgage Calculator (PITI) — calcdomain.com · Accessed 2026-01-19
https://calcdomain.com/mortgage
Loan Payoff Calculator — calcdomain.com · Accessed 2026-01-19
https://calcdomain.com/loan-payoff
APR Calculator — calcdomain.com · Accessed 2026-01-19
https://calcdomain.com/apr

Changelog

Version: 0.1.0-draft
Last code update: 2026-01-19

0.1.0-draft · 2026-01-19

Initial audit spec draft generated from HTML extraction (review required).
Verify formulas match the calculator engine and convert any text-only formulas to LaTeX.
Confirm sources are authoritative and relevant to the calculator methodology.

Verified by Ugo Candido on 2026-01-19
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