Loans and debt guide
What Counts as Debt in a Debt-to-Income Ratio?
Debt-to-income ratio compares qualifying monthly debt payments with gross monthly income. Lenders decide which obligations to include under their loan program and underwriting rules, so a personal budget calculation may not match a lender’s DTI exactly.
The basic ratio
DTI = monthly debt payments ÷ gross monthly income × 100. Gross income is income before taxes and many other deductions. For a mortgage review, the housing payment may include principal, interest, property taxes, homeowners insurance, mortgage insurance, and applicable association dues; other recurring debt payments may also count.
Common obligations to list
For a first estimate, gather required payments for auto loans, student loans, credit cards, personal loans, and any other installment or revolving debt. Include the proposed housing payment when calculating a housing-inclusive ratio. Child support, alimony, or other obligations may be considered depending on the application and lender’s rules. Verify the treatment with the lender.
A simple example
If gross monthly income is $6,000, proposed housing cost is $1,800, and other counted monthly debt payments total $450, housing DTI is 30% ($1,800 ÷ $6,000). Total DTI is 37.5% (($1,800 + $450) ÷ $6,000). This arithmetic example does not represent an approval threshold.
Why your number may differ
Income documentation, variable pay, self-employment income, co-borrowers, obligations with few payments remaining, and loan-program definitions can affect underwriting. Credit reports may not show every obligation or its current payment. Ask the lender what income and debt figures it used and how it treats each item. For a planning worksheet, note the source and date for each balance and payment so that your estimate is reproducible. If a debt is paid off or a housing quote changes, update the inputs rather than carrying forward an old ratio.
DTI is one planning measure
DTI does not account for every cost of living, savings goal, or financial risk. A household can have a low ratio and still feel stretched by childcare, healthcare, utilities, or irregular expenses. Use a realistic budget alongside the ratio and avoid treating a lender’s maximum as a personal spending target.
Frequently asked questions
Does DTI use take-home pay?
The common ratio uses gross income before taxes and deductions, subject to lender definitions.
Do credit cards count?
A lender may use a required payment amount under applicable underwriting rules; confirm the figure used for your application.
Sources and further reading
Try the calculator
Use the Debt-to-Income Ratio Calculator to explore your own numbers with the assumptions shown in the tool.
Related guides
Educational content only; not individualized financial, tax, or legal advice.