If you’ve ever applied for a mortgage, you’ve probably heard the term DTI—but what does it really mean?

DTI stands for Debt-to-Income Ratio, and it’s one of the key “ratios” lenders use to determine how much house you can afford. It’s not just about how much you make—it’s also about how much you owe.

Two Types of DTI Ratios: Front-End and Back-End

When qualifying for a home loan, lenders look at two ratios:

🔹 Front-End Ratio – This includes your proposed housing payment:

• Principal
• Interest
• Property taxes
• Homeowners insurance (HOI)
• HOA dues (if applicable)

This is essentially what your monthly mortgage payment will be.

🔹 Back-End Ratio – This takes it a step further. It includes your full monthly obligations, such as:

• That same housing payment
• Minimum payments on credit cards
• Auto loans
• Student loan payments
• 401k loan repayments
• Alimony or child support

👉 What’s NOT included? Things like utilities, groceries, gas, or entertainment. However, those expenses are still very real for you, so be sure to calculate those when determining your personal budget.

As I often tell clients: What I say you can qualify for may not match what actually feels comfortable for your lifestyle. I’m looking at the numbers the system requires—but you know your full financial picture best.

So, What Should Your DTI Be?

Every loan program is a bit different:

• FHA tends to be the most flexible with DTI ratios
• Conventional loans are a little tighter
• Non-QM loans typically cap the back-end ratio at 50%

Even if you’re slightly over a program’s guideline, don’t panic—if you have strong compensating factors (like great credit, cash reserves, or a large down payment), we might still be able to make it work.

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Have questions about your own DTI or how much house you can afford?

Let’s chat! I’m always happy to walk you through your numbers and help you make confident, informed decisions.

– Dana Scott | Trust Mortgage