The two ratios that set a payment
Front-end DTI (housing ratio) is the monthly housing payment divided by gross monthly income. Housing here means principal, interest, property tax, homeowners insurance, HOA or condo dues, and mortgage insurance when it applies. That bundle is PITI, plus dues and MI.
Back-end DTI (total-debt ratio) is housing plus other recurring debts, divided by the same gross income. Other debts are the minimum payments a credit report and application show: auto loans, student loans, revolving cards, personal loans, and court-ordered support.
Gross income is pay before tax, not take-home. A $90,000 salary is $7,500 a month for DTI, even if the paycheck is smaller.
Conventional 28/36 and FHA 29/41
Consumer education tables have used 28% front / 36% back for conventional (conforming) loans for decades. Fannie Mae’s selling guide still discusses housing and total expense ratios; Desktop Underwriter can approve higher numbers when the rest of the file is strong.
HouseAfford’s FHA preset is 29% / 41%, a conservative pair used in many buyer-education calculators. HUD Handbook 4000.1 manual underwriting often cites 31% / 43%. TOTAL Scorecard can go higher. If you are comparing an FHA quote, switch the custom caps to 31/43 and see how the price moves.
VA and USDA loans lean on residual income and total DTI more than a strict front-end cap. They are not presets here because a residual-income table is a different tool.
Which cap binds?
The payment you can support is the smaller of:
- front-end cap × monthly income
- back-end cap × monthly income − other monthly debts
Example: $8,000 gross monthly income, $400 other debts, conventional 28/36. Front-end allows $2,240 for housing. Back-end allows $2,880 − $400 = $2,480. The front-end number wins. Raise the car payment to $1,000 and the back-end remainder falls to $1,880 — now debts, not the house, set the limit.
If other debts already meet or exceed the back-end cap, there is no room for a mortgage payment at that guideline. Paying down installment balances, or waiting out a loan that is about to fall off, does more than shopping a slightly lower rate.
What counts — and what usually does not
- Counts: installment loans, revolving minimums, HELOCs, child support, alimony.
- Often counted: student loans (even in deferment, using the servicer or a percent of balance), lease payments, co-signed debt if you cannot document that the other party pays.
- Usually not DTI debts: utilities, cell phone, groceries, childcare, federal income tax. Those still hit residual cash.
Authorized-user cards and debts with fewer than ten months remaining can be treated differently by program. Do not assume the friendliest rule.
Why a high DTI still gets approved
Compensating factors — reserves, a high credit score, limited payment shock, extra down payment, or a long history of a similar rent — can offset a ratio above the education table. That is why two households with the same DTI get different letters. HouseAfford does not score credit or look at bank statements. It only shows the payment a stated cap will carry.
Use the mortgage affordability calculator to see which ratio binds on your file, then read tips if you need the number to move.
HouseAfford is an educational estimate, not a pre-approval, pre-qualification, or offer to lend. Lenders also weigh credit, assets, employment, property type, and automated underwriting. Actual approval and payment will differ.