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What Is Debt-to-Income Ratio and Why It Matters
Front-End vs Back-End DTI Explained
How Lenders Use DTI to Approve Loans
How to Lower Your Debt-to-Income Ratio
Frequently Asked Questions
A DTI below 36% is considered good by most lenders. Below 28% is excellent. Between 36%–43% is acceptable for most mortgages. Above 43% makes qualifying for new loans difficult, and above 50% signals serious financial stress.
Front-end DTI includes only housing costs (mortgage/rent, property tax, insurance) divided by income. Back-end DTI includes all monthly debt obligations. Mortgage lenders typically want front-end DTI below 28% and back-end DTI below 36%.
Most conventional mortgages require a back-end DTI of 43% or less. FHA loans may allow up to 50% with compensating factors. A lower DTI not only helps you qualify but may also get you a better interest rate.
You can lower DTI by paying down existing debts, increasing your income, avoiding new debt, or refinancing to lower payments. Even paying off a small credit card balance can improve your ratio enough to qualify for a mortgage.