What counts in debt-to-income (DTI)
DTI is usually based on required monthly debt payments divided by gross monthly income. This guide summarizes what typically counts, how minimum payments are treated, and how to document the assumptions you used.
DTI inputs to verify
- Gross monthly income from documented sources.
- Housing payment (PITI + HOA + PMI if applicable).
- Required minimum payments for other debts.
- Any lender-specific rules for student loans or deferred debt.
Debts that usually count
- Mortgage or rent payment for the new loan scenario.
- Auto, student, and personal loan payments.
- Minimum credit card payments.
- Required support or alimony obligations.
Items that often cause confusion
- Subscriptions and utilities usually do not count as debt.
- Insurance premiums can be part of the housing payment, not separate debt.
- Deferred loans may still count based on lender rules.
Debt treatment quick reference
| Debt type | Typical DTI treatment | Notes to confirm |
|---|---|---|
| Credit cards | Use the required minimum payment on the statement or credit report. | Some lenders use a percent of balance when minimums are not listed. |
| Installment loans / leases | Use the required monthly payment. | Some programs allow exclusions if a loan is near payoff and will be closed. |
| Student loans | Use the reported payment if it is active. | Deferred or $0 payments may be replaced with an assumed payment. |
| Support obligations | Include any required payments by court order. | Document the required amount and payment schedule. |
| Co-signed loans | Often included unless you can document another party has been paying. | Ask the lender which documentation is needed for exclusion. |
| Collections or medical | Usually excluded unless there is a required payment plan. | Confirm whether the payment shows on your credit report. |
Income documentation quick reference
| Income source | Typical documentation | How it is used in DTI |
|---|---|---|
| Base salary or hourly | Recent pay stubs and W-2s | Use gross monthly income shown on documents. |
| Bonuses or commissions | Pay stubs, W-2s, and history | Often averaged over a stable period. |
| Self-employed | Tax returns, year-to-date P&L | Use documented net income with lender-approved add-backs. |
| Rental or secondary income | Lease agreements and tax returns | Use stable, documented income after expenses. |
How minimum payments are treated
Most lenders use the minimum required payment on credit cards, not your planned payoff amount. If you pay more than the minimum, the DTI ratio will still be based on the required minimum unless the lender uses a different rule.
Gross vs net income
DTI is typically based on gross income before taxes. Using net income will make the ratio look worse, so keep the definition consistent when comparing scenarios.
Housing payment components
- Principal and interest from the loan amount and rate.
- Property taxes, insurance, HOA, and mortgage insurance if applicable.
- Use the lender estimate if you have a Loan Estimate or pre-approval.
DTI formula (simple example)
Example: gross income is $6,000/month. Required debt payments are $1,900/month (housing $1,400 + auto $300 + card minimums $200). DTI = $1,900 / $6,000 = 31.7%. Keep the inputs consistent when comparing offers.
Student loans and deferred balances
Many programs use the payment shown on your credit report, but some use an assumed payment if the loan is deferred or shows a zero payment. Check the lender rule before excluding the loan from DTI.
Typical DTI band checks
Many lenders evaluate whether your DTI is within a target band for the loan program. The exact thresholds vary, but lower ratios generally offer more flexibility. Use your own lender's guidance rather than a generic target.
- Lower DTI usually means easier approval and more pricing options.
- Borderline DTI often requires stronger credit, larger reserves, or more documentation.
- Higher DTI can still be approved with compensating factors like higher down payment or stable income.
Front-end vs back-end DTI
Some lenders look at a housing-only ratio (front-end) and a total-debt ratio (back-end). Front-end is usually housing costs divided by gross income, while back-end includes all required debt payments. Ask which ratio is being used.
Checklist: document your inputs
- List each required payment and where it appears on your statement.
- Record the minimum card payment used in the calculation.
- Note whether housing payment includes taxes, insurance, and PMI.
Variable income and co-borrowers
If income varies, use a stable documented average rather than a best month. For co-borrowers, combine documented gross income and include required debts for both borrowers so the ratio matches underwriting.
When exceptions apply
Lenders sometimes allow documented exceptions for co-signed loans or deferred student loans, but the rules vary by program. Always confirm the specific documentation required before assuming an exclusion.
Documents lenders often use
- Recent statements showing required minimum payments.
- Loan Estimate or mortgage payment breakdown for housing costs.
- Pay stubs and W-2s or tax returns for income verification.
- Payoff letters when a debt was recently closed.
Statement check
- Use the current required minimum payment on each card.
- Confirm the remaining term and payment for installment loans.
- Use gross income from pay stubs or tax documents.
FAQ
Do medical bills count?
Only if they are part of a required monthly payment arrangement. Otherwise, they are not typically included in DTI.
Do co-signed loans count?
They often do, unless you can document that another party has been paying consistently per lender requirements.
References
- CFPB: Mortgage resources
Next steps
Educational use only. Not financial advice.
Last updated: 2026-02-17