Debt-to-Income Ratio (DTI) for Mortgages: What You Need to Know
Your debt-to-income (DTI) ratio is one of the most important numbers lenders look at when deciding whether to approve your mortgage. This percentage compares your monthly debt payments to your income to determine how much house you can afford.
A low DTI is good because it shows you have very little debt compared to your income. As a result, you may qualify for a larger loan. A high DTI might make it harder to get approved for a loan at all. Here’s how DTI works and what you can do if your ratio is too high.
Table of Contents
- What is the maximum DTI for a mortgage?
- Can other application strengths make up for a high DTI?
- What to do if you’re denied a mortgage due to high DTI
- Tips to get a mortgage even with a high debt-to-income ratio
- How to calculate your DTI for a mortgage
- What is a good debt-to-income ratio for a mortgage?
What is the maximum DTI for a mortgage?
The maximum DTI ratio you can have depends on the mortgage type and lender you choose. Most lenders require you to have a DTI below 36% or 43%, but some approve ratios higher than this if other parts of your application are strong, like if you have a high credit score, a big down payment, or a steady income.
This chart shows common DTI limits by loan type:
| Loan type | Typical maximum DTI |
| Conventional | 36% – 45% |
| FHA loan | 43% – 50% |
| VA loan | 41%* |
| USDA loan | 41% |
| Jumbo loan | 40% |
Pro tipIf your DTI is on the edge of approval, try to pay down debt or apply with a co-borrower to strengthen your application. Shopping around can also help—different lenders set different DTI limits based on how much risk they’re willing to take.
If you struggle to get a mortgage due to your DTI, I initially advise not applying for or seeking out any other financing until after you have secured the mortgage. Secondly, focus on debt reduction and budgeting along with strategies to increase income (i.e. ask for a raise or add a side job). Also, keep your current job unless there is an opportunity for a significant increase in income—lenders like to see at least two years of stable job/income, so changing jobs could be a risk to be aware of.
Erin Kinkade, CFP®
Can other application strengths make up for a high DTI?
The good news is that a high DTI ratio doesn’t mean you’re out of options. Some lenders are willing to approve your mortgage if you have other proof you can pay back your loan. This might include:
- High income or steady job history. Lenders care about your ability to make consistent payments. A steady income or long-term employment can offset a high DTI because it shows you have reliable cash flow to cover your mortgage and other debts.
- Great credit score and savings. A high credit score (740 or better) shows you’ve managed credit responsibly, even with some debt. Having several months’ worth of mortgage payments in your bank account can also reassure lenders you have a financial cushion if unexpected expenses come up.
- Bigger down payment. The more you put down, the less you’ll need to borrow—which lowers your monthly payment and your DTI. A 20% down payment or more will reduce your lender’s risk and may make your loan application more appealing.
Pro tipUse a marketplace like LendingTree to quickly compare options and find a lender willing to accept higher DTI ratios. Rather than applying for mortgages one at a time, you can submit a single application through LendingTree and view several offers at once.
What to do if you’re denied a mortgage due to high DTI
Being denied a mortgage because of a high DTI ratio can feel discouraging, but it’s not the end of the road. Here’s what you can do to improve your chances and try again:
1. Ask the lender why you were denied
Lenders are required to explain why they denied your application. Review their feedback to determine whether your DTI was the main issue or if other factors, like your credit score or down payment, also played a role.
2. Work on lowering your DTI
If you were denied because of a high DTI, you can use these steps to lower your ratio:
- Pay down debt. Paying off high-interest loans or credit cards can lower your monthly debt payments.
- Increase your income. Taking on a side job or asking for a raise can also help lower your DTI ratio.
Both strategies take time, but even small changes can make a difference.
3. Shop around for other lenders
DTI thresholds vary by lender, so getting denied by one doesn’t mean others will reject you. Try getting pre-qualified with other mortgage lenders to see if there’s one out there willing to work with you.
How long should you wait before applying again?How long you should wait depends on why you were denied. If DTI was the primary issue, monitor your ratio (we show you how to calculate it below) until you meet the lender’s threshold—this could take a few months of paying down debt or boosting your income. If other factors, like your credit score or savings, were the reason, focus on improving those areas before reapplying.
Tips to get a mortgage even with a high debt-to-income ratio
Even if you have a high DTI—and don’t have time to lower it—you may not be automatically disqualified from getting a mortgage. You can use tips like these to potentially still get approved:
1. Find a way to lower your potential mortgage payment
Your potential mortgage payment gets factored into your DTI ratio. If you find a way to lower this potential payment—maybe by applying for a smaller loan amount or making a larger down payment—it may bring your DTI below the lender’s threshold.
For example, if a loan of $400,000 pushes you over the lender’s maximum DTI ratio, you can either look for a more affordable home requiring a smaller loan or scrounge up a larger down payment.
2. Add a co-borrower to your application
A co-borrower with little or no debt can also lower the overall DTI ratio for your application. This strategy works best if the co-borrower has strong income and credit and is just as committed to repaying the loan as you are.
3. Get a government-backed loan
FHA loans, VA loans, and USDA loans often have more lenient DTI requirements than conventional loans. For example, FHA loans may allow DTIs as high as 57% in certain cases. As a result, these could be a good option for borrowers with higher debt.
4. Get prequalified with top mortgage lenders
Use a loan marketplace like LendingTree to compare options and find lenders willing to approve you for a mortgage with a higher DTI.
This table shows the maximum DTI limits for popular mortgage companies:
| Lender | Max. DTI | Starting rates (APR) |
| LendingTree | 50% | 5.89% – 7.09% |
| SoFi | 50% | 5.91% – 6.53% |
| Rocket Mortgage | 50% | 6.167% – 7.19% |
| Quicken Loans | 50% | 6.56% – 7.19% |
| Navy Federal | 43% | 5.59% – 7.20% |
5. Avoid taking on new debt before applying
Lastly, hold off on financing large purchases or opening new credit accounts until after your mortgage closes. Even a small loan could push your DTI past the lender’s limit, causing delays—or worse, a loan denial.
Did you know?Lenders recalculate your DTI ratio throughout the approval process, even after you’ve been pre-qualified. Some may perform a “credit refresh” within 10 days before closing to verify your DTI.
How to calculate your DTI for a mortgage
Knowing your DTI ratio can help you monitor your approval odds. Follow these steps to calculate your DTI:
1. Add up your monthly debt payments
Include all recurring debts, such as:
- Credit card minimum payments
- Auto loans
- Student loans
- Personal loans
- Any other installment debt
For example, if you pay $700 for your car loan, $500 for student loans, and $200 in credit card minimums, your total monthly debt is:
$700 + $500 + $200 = $1,400.
2. Divide by your gross monthly income
Gross monthly income is your total income before taxes and deductions. If you earn $60,000 per year, that’s $5,000 per month. You divide your total debt by this monthly amount:
$1,400 ÷ $5,000 = 0.28.
Have irregular income? Use this trick. If your income varies from month to month, use last year’s tax return to calculate your gross monthly income. For instance, if your tax return says you made $57,000 last year, your gross monthly income is $4,750 ($57,000 / 12).
3. Convert to a percentage
Multiply this number by 100 to express your DTI as a percentage:
0.28 × 100 = 28%.
This means your DTI is 28%.
You can do this math at any time to figure out your own DTI and see where you stand before applying for a mortgage.
What is a good debt-to-income ratio for a mortgage?
A good DTI ratio for a mortgage is typically 36% or lower. However, there are some exceptions. Some lenders might allow DTIs up to 43% or 45% (or even 57% in the case of FHA-backed loans).
Lenders look at two types of DTI: front-end and back-end.
Your front-end DTI measures only housing-related costs like your mortgage payment, property taxes, home insurance, and any applicable homeowners association (HOA) fees.
Ideal target for front-end DTI: 28% or less.
Your back-end DTI includes all your monthly debt payments, such as credit cards, car loans, student loans, and potential mortgage payments.
Ideal target for back-end DTI: 36% or less
Remember—a low DTI shows lenders you can manage monthly payments without financial stress. Staying within these ideal target ranges makes you a lower-risk borrower who will likely qualify for better mortgage rates and loan terms.
The post Debt-to-Income Ratio (DTI) for Mortgages: What You Need to Know appeared first on LendEDU.