What Debts Count in Your Debt-to-Income Ratio?

The short answer

The Consumer Financial Protection Bureau (CFPB) describes DTI as all monthly debt payments divided by gross monthly income. In mortgage underwriting, the calculation normally includes the proposed qualifying housing payment plus other recurring obligations the loan program requires the lender to count.

Common examples include credit-card payments, vehicle loans, student loans, installment loans, leases, other real-estate debt, and certain recurring support obligations.

Debts commonly counted

Fannie Mae's current mortgage guidance provides a useful example of how detailed underwriting can become. Its total monthly obligation can include the qualifying payment for the new mortgage and other long-term or significant short-term monthly debts.

• Credit cards and other revolving accounts
• Vehicle loans and other installment debt
• Student loans
• Lease payments
• Other mortgages and real-estate debt
• Home equity lines of credit when applicable
• Recurring support or maintenance obligations when applicable
• Other recurring debts required by the loan program

That list is a starting point, not a universal checklist. Different lenders and loan products can apply different rules, which CFPB also notes in its consumer DTI guidance.

Credit cards and revolving debt

Revolving accounts are generally part of recurring monthly debt. That includes credit cards and personal lines of credit. For a simple personal estimate, the required minimum payment is usually more useful than the outstanding balance.

A mortgage lender can apply a specific fallback when no monthly payment is shown. For example, current Fannie Mae guidance says that if a revolving account has no documented required payment, the lender generally uses 5% of the outstanding balance unless acceptable documentation supports a lower payment. Its automated underwriting system can also apply a specified fallback when the application lacks a payment amount.

This is one reason your own DTI estimate can differ from the lender's number even when both calculations start with the same credit-card balance.

Car, student, and installment loans

Monthly payments on vehicle loans, personal loans, student loans, and other installment debts commonly count toward DTI. The lender may have special rules when only a small number of payments remain or when a payment is deferred.

Fannie Mae, for example, generally includes installment debts extending beyond ten months. A shorter remaining term does not automatically make a payment irrelevant: it can still be counted when the payment significantly affects the borrower's ability to meet obligations.

Student loans can have their own qualifying-payment rules, especially when the current payment is deferred, income-driven, or not clearly reported. For an application, use the payment amount the lender says applies rather than guessing from the balance.

Housing and real-estate debt

When DTI is being used for a new mortgage, the proposed qualifying housing payment is central to the calculation. Depending on the transaction, that payment can include more than principal and interest.

Property taxes, homeowners insurance, mortgage insurance when applicable, and association dues can affect the monthly housing obligation used for qualification. Other mortgages, home equity debt, and retained real estate can also affect total monthly obligations.

If you are only estimating your current personal debt load, decide whether you want a consumer debt ratio or a mortgage qualification scenario. They answer slightly different questions.

Support and other recurring obligations

Court-ordered or otherwise documented recurring obligations can affect DTI. Current Fannie Mae guidance addresses alimony, child support, separate maintenance, tax installment agreements, and several less common recurring liabilities.

Some programs allow particular obligations to be treated in more than one way. For example, certain alimony payments may be handled as a reduction of qualifying income rather than as a monthly debt under specified rules.

If an obligation is unusual, do not force it into a generic calculator field and assume the lender will do the same thing. Run a planning estimate, then confirm the program's treatment.

Expenses that are not usually DTI debt

DTI is not the percentage of income consumed by every household expense. Ordinary spending that is not a debt obligation is generally outside the basic debt numerator.

• Groceries
• Utilities
• Fuel and routine transportation spending
• Streaming and other ordinary subscriptions
• Voluntary savings and investing
• Most routine household spending that is not borrowed debt

Some costs that look like ordinary expenses can still be part of a mortgage housing payment. Property taxes and homeowners insurance are good examples. This is why DTI should not be reconstructed from a checking-account statement alone.

Why some debts may be treated differently

Mortgage guidelines contain exceptions because a credit report does not always tell the full story. A borrower may be legally obligated on a debt that another person has been paying, an installment loan may be nearly finished, or a revolving account may be paid off at closing.

Current Fannie Mae guidance allows some debts paid by another party to be excluded when documentation and payment history meet the applicable requirements. It also has separate rules for debts paid off or paid down at or before closing.

The practical lesson is simple: a personal DTI calculator is excellent for planning, but underwriting is a documented calculation rather than a universal list of yes-or-no rules.

A DTI example

Suppose gross monthly income is $8,000 and you enter:

• $2,000 qualifying housing payment
• $150 credit-card minimum payments
• $450 vehicle payment
• $200 student-loan payment

The total entered monthly debt is $2,800. Dividing $2,800 by $8,000 produces a modeled DTI of 35%.

If a lender uses a different qualifying student-loan payment or housing payment, the lender's DTI will differ even though your underlying debts did not change.

For an actual mortgage application

Start with your own estimate so you understand which payments are driving the ratio. Then compare it with the lender's worksheet or explanation.

Ask which income was used, which monthly obligations were counted, and what qualifying housing payment was used. Those three pieces usually explain most differences between a personal estimate and an underwriting result.

If the ratio is higher than expected, the next question may be whether eliminating a monthly payment would change it. The related article Does Paying Off a Credit Card Lower Your DTI? walks through that case.

Frequently asked questions

Do utility bills count in DTI?

Ordinary utility bills are generally household expenses rather than debt obligations. They still matter to affordability even though they are usually outside the basic DTI numerator.

Does a car lease count in DTI?

It can. Current Fannie Mae guidance includes lease payments in recurring monthly obligations regardless of the lease expiration date.

Do credit cards count if I pay them in full?

Revolving accounts can still have a monthly obligation. A balance that is actually paid off at or before mortgage closing can receive different treatment under program rules.

Does the lender count debts that someone else pays?

Sometimes a debt can be excluded when another party has made the payments and the applicable documentation requirements are satisfied. The exact rule depends on the debt and loan program.

Is rent part of DTI?

That depends on what you are measuring. Consumer debt worksheets and mortgage underwriting can treat housing differently. For a new mortgage, the proposed qualifying housing payment is the more relevant figure than simply adding current rent to every other debt.

Sources and further reading

• Consumer Financial Protection Bureau: What is a debt-to-income ratio?
• Fannie Mae Selling Guide: Debt-to-Income Ratios
• Fannie Mae Selling Guide: Monthly Debt Obligations
• Fannie Mae Selling Guide: Debts Paid Off At or Prior to Closing