How does DTI get calculated for mortgages, and which debts are included?

How do lenders calculate debt-to-income ratio?

You want to understand how lenders calculate your debt-to-income ratio and which monthly payments count toward that calculation. Lenders use DTI to assess whether you can handle a mortgage payment alongside your existing debts.

Lenders calculate DTI by dividing your total monthly debt payments by your gross monthly income. The calculation includes minimum payments on credit cards, student loans, auto loans, personal loans, and other installment debts. Monthly alimony or child support payments also count. The calculation doesn't include utilities, groceries, insurance premiums, or other living expenses that aren't debt obligations.

Check your credit report to see all accounts lenders will review. Look at minimum payment amounts on each account—those monthly minimums go into the DTI calculation. Student loans in deferment or forbearance typically still count using either the actual payment amount or a percentage of the loan balance, depending on the loan program.

Most conventional loans allow DTI ratios up to 43-50%, though this varies by lender and loan type. Government-backed loans like FHA, VA, and USDA loans may allow higher ratios in some cases. Share your current debt list with the lender and they can walk you through how your specific DTI calculation works for different loan programs.