Question 1

What is a debt-to-income (DTI) ratio?

Accepted Answer

DTI is the percentage of your gross monthly income that goes toward debt payments. Lenders calculate it as: Total Monthly Debt Payments ÷ Gross Monthly Income × 100. A ratio of 36% or below is considered healthy by most lenders. Above 43% typically disqualifies you from a qualified mortgage.

Question 2

What is the difference between front-end and back-end DTI?

Accepted Answer

Front-end DTI (also called the housing ratio) includes only housing-related costs — mortgage principal, interest, taxes, and insurance (PITI). The guideline is ≤ 28%. Back-end DTI includes all monthly debt payments (housing + car loans + student loans + credit cards). The guideline is ≤ 36–43%. This calculator uses back-end DTI.

Question 3

Should I use gross or net income?

Accepted Answer

Lenders always use gross income (before taxes) for DTI calculations. This calculator does the same. Using net income would give you a stricter, more conservative affordability estimate — which can actually be useful for personal budgeting even if lenders don't require it.

Question 4

What counts as existing monthly debt?

Accepted Answer

Include: minimum credit card payments, car loan payments, student loan payments, personal loan payments, child support or alimony, and any other recurring debt obligations. Do not include: utilities, insurance, groceries, subscriptions, or other living expenses — lenders exclude these from DTI.