What debt-to-income ratio do I need?

How to work it out

Add up every monthly debt payment, including the full payment on the new mortgage, and divide by your monthly income before taxes. If your debts come to a third of your gross income, your ratio is 33%.

Lenders often look at two versions. The housing ratio counts only the new house payment: principal, interest, taxes, insurance, mortgage insurance and any HOA dues. The total ratio adds your other debts, and it is usually the one that decides the loan.

What counts as debt

Broadly, the payments that appear on your credit report, plus the new house payment:

• The new house payment, including taxes, insurance, mortgage insurance and HOA dues
• Car loans and leases
• Student loans, including deferred ones — lenders have their own rules for estimating a payment when the reported one is zero
• The minimum payment on each credit card, not the balance
• Personal loans, and any other mortgage you are keeping
• Child support and alimony you pay

What does not count

Everyday living costs are left out, even though they come out of the same paycheck: utilities, phone and internet, groceries, car insurance, subscriptions and childcare. That is one reason a ratio a lender will accept can still feel tight in real life.

What lenders accept

For a conventional loan, Fannie Mae allows a ratio of up to 50% when its automated underwriting system approves the file. A loan underwritten by hand is held to 36%, or up to 45% with stronger credit and savings.

FHA and VA loans have their own standards, and VA adds a separate test of how much money is left over each month once the bills are paid. Individual lenders can also set limits stricter than the agencies do, which is one reason the same file can be approved by one lender and declined by another.

Ways to bring it down

The ratio moves from either end, so you can lower the debt or raise the income counted against it:

• Pay down credit card balances, which lowers the minimum payments that count against you
• Hold off on any new car loan or credit account until after closing
• Put more down, or choose a less expensive home, to lower the new payment
• Add a co-borrower whose income is counted alongside yours

Sources

We would rather you checked than took our word for it.

• CFPB: what is a debt-to-income ratio?
• Fannie Mae Selling Guide B3-6-02: debt-to-income ratios

Written by Jeff Zimmer (NMLS #118397), loan officer at Triangle Mortgage LLC, a licensed mortgage broker in Raleigh, NC (NMLS #1725415). First published September 25, 2026. General information, not personalized financial advice — your situation may differ.