If you're thinking about buying a home, your debt-to-income ratio (DTI) is a number you'll want to get familiar with before you apply. It tells lenders how much of your income is already tied up in other debt, like credit cards, car loans, or student loans. The lower your DTI, the better your chances of getting approved for a mortgage.
How to Figure Out Your Debt-to-Income Ratio
The math is straightforward. Add up all your monthly debt payments, including your car loan, minimum credit card payments, and student loans. Divide that total by your gross monthly income (before taxes). Multiply by 100 to get your percentage.
Say you make $6,000 a month and your total monthly debt is $2,000. Your DTI is 33.3%. That's a number most lenders will be comfortable with. A high DTI doesn't automatically mean rejection, but it can make approval harder and your loan terms less favorable. It's worth knowing your number before you start shopping for a home, not after.
What's a Good DTI for a Mortgage?
Most lenders like to see a DTI under 36% for conventional loans. That's the sweet spot. If you're in the 37 to 43 percent range, you still have options, but it may depend on other parts of your financial picture. FHA loans are a bit more flexible and sometimes go up to 50% if you've got strong compensating factors like good credit or solid savings. VA loans don't use a hard DTI cutoff. Instead, they look at residual income: how much money you have left over each month after covering basic expenses.
Can You Get a Mortgage with a High DTI?
You can, but it may take more work. Some lenders, especially portfolio lenders who hold their own loans rather than selling them, are more flexible on DTI. FHA and VA programs also have more room to work with. A higher DTI might mean a higher interest rate or a requirement for a larger down payment, so you may get the loan but pay more for it over time.
How to Lower Your DTI
The fastest path is usually paying off debt. Focus on high-interest credit card debt first. Even paying off a smaller balance can make a noticeable difference because it removes that minimum payment from your monthly obligation. Boosting your income helps too, even temporarily. A freelance project, an additional shift, or a raise can move the needle. And if you're planning any large purchases like a new car, wait until after you've closed on the house. Every new monthly payment counts against your DTI.
Want to know your DTI before you apply?
We'll run the numbers with you and put a real plan together based on your actual file, not a calculator estimate.
Why DTI Matters Especially for First-Time Buyers
If this is your first time buying a home, your DTI shapes how much you can borrow and which loan programs you qualify for. Knowing it ahead of time helps you set a realistic home budget, avoid surprises during underwriting, and keep your loan process moving. It's one of those numbers that's easy to calculate and hard to fix quickly, so checking it early gives you time to adjust. Getting a full DU approval before you start shopping is the best way to know exactly where your file stands on every factor, DTI included.
At 14 Days To Close, we'll help you crunch your numbers, review your loan options, and put together a plan that fits your goals. If your DTI needs work, we'll stay in touch and support you through the process.
