I don’t think people talk about debt-to-income nearly enough.

And I get it — you’re probably thinking, “Why do I even care about debt-to-income?”
Here’s why: it’s one of the biggest indicators of whether you’ll get approved for a mortgage and whether you’ll actually be comfortable once you own the home.

Getting approved is one thing.
Being able to live your life without constantly stressing about money is another.

So, let’s talk about what debt-to-income (DTI) actually is, how lenders look at it, and why doing this calculation correctly matters more than you think.

What Is Debt-to-Income, really?

From a lender’s perspective, debt-to-income has two parts:

1. Front-End DTI
2. Back-End DTI

And no — they are not the same thing.

Front-End Debt-to-Income

Your front-end DTI is:

Your projected housing payment ÷ your gross monthly income

Gross income means before taxes, not what hits your bank account.

Your housing payment includes:

• Principal & interest
• Property taxes
• Homeowners insurance
• HOA (if applicable)

This ratio tells us how much of your income would go toward housing alone.

Back-End Debt-to-Income

Your back-end DTI includes everything:

Your projected housing payment + all minimum monthly debts ÷ gross income

This means:

• Car loans
• Credit cards (minimum payments, not balances)
• Student loans
• Personal loans
• Alimony or child support
• And for VA loans only: daycare expenses

Yes — VA loans are the only loan type where daycare is included in DTI, and it’s for daycare specifically.

Why Most People Calculate DTI Wrong

There are a lot of variables, and they change based on:

• Loan program
• Income type
• Student loan status
• Whether payments are deferred
• Whether balances are paid off monthly

This is why I strongly recommend doing your DTI with a lender, especially if you:

• Have student loans
• Earn commission, overtime, or bonuses
• Are self-employed
• Are looking at a VA loan

Alyssa and Sandy put together a DTI calculator you can go through with them (for free), and I highly recommend doing it on the phone. There are just too many nuances to wing it.

What’s a “Good” Debt-to-Income?

I wish I could give you one perfect number.

I can’t.

There is no one-size-fits-all DTI — despite what you may hear elsewhere.

That said, if I see something like:

• 30% front-end
• 80% back-end

…we need to have a conversation.

That tells me the house itself might be reasonable, but there is a lot of debt sitting on your credit report. That’s usually a sign it’s time for budgeting and debt cleanup before buying.

Income: How Lenders Look at It (This Is Huge)

One of the biggest disconnects I see is that lenders look at income very differently than you do.

And it’s not personal — it’s guideline-driven.

Salary Income

Easy.

• Annual salary ÷ 12 = monthly income

Bonuses?

• We need a 2-year history and we average them.

Commission Income

Also averaged over two years.

If income is declining:

• We usually use the lower year
• A significant decline can disqualify you altogether

If you don’t have a two-year commission history, you must talk to a lender.

Hourly + Overtime

If you work 40 hours consistently, that’s straightforward.

Overtime?

• Needs to be averaged over two years
• If overtime is declining, it can be a problem
• This requires deeper documentation and underwriting review

Self-Employed Income

This is not gross income.
We look at:

• Net income
• Plus specific add-backs

Self-employed borrowers should always do an application early to avoid surprises.

Choosing the Right Mortgage Payment

When you’re first calculating DTI, start with what you’re comfortable paying — not the maximum a lender might approve.

Write down:

“I’m comfortable with $2,500/month.”

Use that number.

Online calculators are fine for ballpark estimates, but once you get into:

• Property taxes
• Insurance
• County-specific rules
• HOA structures

…those calculators fall apart quickly.

This exercise helps answer an important question:

Am I assuming I can afford more than I realistically should?
—or—
Am I being way too conservative?

I see both all the time.

Back-End DTI: How to Calculate It at Home

If you’re doing this yourself:

1. Pull your credit report (Credit Karma works)
2. Write down each minimum payment
3. Add them to your projected mortgage payment
4. Divide by your gross monthly income

Example:

• Car loan: $400
• Credit card minimum: $100
• Mortgage payment: $2,500

Total debt = $3,000
Divide by income → that’s your back-end DTI

A quick note:

• If you pay a credit card off every month, don’t include it — just tell your lender
• American Express often shows as a full balance payment — don’t count that if it’s paid monthly

Student Loans: The Trickiest Part

Student loans vary by loan program.

• If you’re in income-based repayment, some programs use that payment
• If loans are deferred over 12 months, many programs exclude them
• If the deferment is short-term, we may need to calculate a payment

This is why guessing here can completely throw off your DTI.

What Lenders Don’t See (And Why That Matters)

Lenders do not factor in:

• Tithing
• College tuition
• Large monthly family expenses
• Lifestyle spending

So, if a lender says you qualify, that doesn’t automatically mean you’ll feel comfortable.

That’s why I hate the idea of “just because you qualify, you should.”

When Debt-to-Income Gets Risky

Once DTI pushes past:

• 50% (conventional)
• 55% (FHA / VA)

…things get tight fast — especially if you have expenses we don’t see.

I was house poor once.
I will never let my clients walk into that blindly.

If your lender won’t talk about DTI with you — that’s a red flag.

What If Your DTI Is High?

My advice is simple:
Do a budget.

I know — no one loves that answer.

But Alyssa and Sandy are budget queens, and they’re happy to help. You can request budgeting help or a DTI review when booking with them — just put it in the notes.

Sometimes you’re ready to buy.
Sometimes you just need a little planning to make it comfortable.

Final Thoughts

Debt-to-income isn’t about approval.
It’s about financial health and quality of life after closing.

You deserve to understand the numbers before you commit to them.

Take advantage of the tools.
Talk to the girls.
Ask the questions.

This is the stuff none of us were taught — and it matters.

Have mortgage questions or want to plan to buy a house? 786-933-2077

www.zerostressmortgage.com