Your income gets you in the door. Your debt decides how far you can go. A $400k approval on $100k salary can disappear entirely with $800/month in existing payments. Here's exactly how lenders count your debt — and what you can do about it.
DTI is not about your total debt balance. It's about minimum monthly payments. Lenders pull your credit report and count every required recurring payment. Not your Netflix. Not your phone bill. Every minimum debt payment.
| Debt type | Counts in DTI? | How lenders calculate it |
|---|---|---|
| Car loan / lease | ✓ Yes | Minimum monthly payment |
| Student loan (active) | ✓ Yes | Actual monthly payment |
| Student loan (deferred) | ✓ Yes | 1% of balance/mo (Fannie Mae) or 0.5% (FHA) |
| Credit card | ✓ Yes | Minimum payment only — not your full balance |
| Personal loan | ✓ Yes | Monthly payment amount |
| Child support / alimony | ✓ Yes | Full monthly obligation |
| Medical debt (collections) | ✓ Sometimes | Depends on loan type and lender |
| Mortgage on another property | ✓ Yes | Full payment |
| Utilities / phone / streaming | ✗ No | Not a debt obligation |
| Rent (current) | ✗ No | Replaced by new mortgage payment |
| Insurance premiums | ✗ No | Not counted in DTI |
Same income. Same rate. Same down payment. Only the monthly debt changes. This is what that looks like on a $400,000 target home at 6.4%.
| Monthly debt | What it covers | Qualifies for $400k? | Max home price | Gap |
|---|---|---|---|---|
| $0 | No existing debt | ✓ Yes | ~$400,000 | — |
| $200/mo | Car payment | ✓ Yes | ~$360,000 | -$40,000 |
| $400/mo | Car + student loan | ✗ Borderline | ~$320,000 | -$80,000 |
| $600/mo | Car + student + cards | ✗ No | ~$280,000 | -$120,000 |
| $800/mo | Multiple debts | ✗ No | ~$240,000 | -$160,000 |
Assumes $100,000 gross income, 6.4% rate, 30-year fixed, 10% down, 28% front-end / 43% back-end DTI limits applied.
Not all loans use the same limit. If your DTI is too high for conventional, a different loan type might still approve you — at a cost.
Conventional
43–50%
Manual: 36–45%
Automेटेड: up to 50%
Requires 620+ credit score
FHA
50–57%
Standard: 43%
With comp factors: 50–57%
Lower credit score threshold (580+). Requires MIP.
VA
Up to 60%
Recommended 41%, flexibility above
No PMI. Veterans/active military only.
USDA
41–46%
Rural properties only
0% down. Income limits apply.
Most buyers assume saving more for a down payment solves a DTI problem. Usually it doesn't. Here's the math on both approaches — on a $400k target.
Eliminating a $350/month car payment on $100k income:
Before: max home ~$320,000
After payoff: max home ~$390,000
Gain: $70,000 in buying power
Adding $20,000 to down payment on $400k home (10% → 15%):
Before: max home ~$320,000
After extra down: max home ~$340,000
Gain: $20,000 in buying power
A high DTI doesn't automatically mean rejection. Lenders can approve above-limit DTI if other parts of your application are strong. These are called compensating factors.
A strong credit score is the single most effective compensating factor. Scores above 720 unlock automated underwriting approval at DTIs up to 50% on conventional loans.
Lenders want to see you can make payments even if income drops. 6 months of mortgage payments in savings after closing significantly improves approval odds at high DTI.
A large down payment reduces lender risk directly. Combined with good credit, it can push conventional approval up to 50% back-end DTI through automated underwriting.
Credit cards and personal loans disappear from DTI calculations completely once paid off. Even paying down a card to $0 balance can drop your minimum payment from $150 to $0 instantly. Timeline: 30–60 days to reflect on credit report.
Car loans and student loans drop off DTI when paid to zero. Focus on the highest monthly payment relative to remaining balance — you want the monthly payment gone, not just the balance reduced. Timeline: depends on balance, typically 6–18 months.
Adding a co-borrower combines incomes — which lowers your combined DTI immediately. Works best when the co-borrower has income but minimal debt. Both credit scores and debt loads are included in the calculation.
Primary tool
Income to House Price Calculator
Enter your income and exact monthly debts. See your front-end and back-end DTI, your maximum home price, and how paying off one debt changes the numbers.
Paying off debt before applying has 3–4× more impact on your buying power than saving for a larger down payment. Start with revolving debt — it disappears fastest.
Student loans in deferment still count. Lenders use 0.5–1% of your total balance as a monthly figure even if you're not paying anything. A $60,000 loan = $300–$600/mo in DTI whether you're paying it or not.
DTI above the limit isn't always a hard no. Strong credit score, cash reserves, and larger down payment are compensating factors lenders use to approve above-standard DTIs — particularly through automated underwriting.
Estimates based on your inputs. Actual results may vary. Terms →