A debt-to-income ratio is the percentage of gross monthly income that goes toward paying debts and is used by lenders to measure your ability to manage monthly payments and repay the money borrowed. There are two kinds of DTI ratios — front-end and back-end — which are typically shown as a percentage like 36/43.

Front-end ratio is the percentage of income that goes toward your total monthly mortgage costs, such as:

Back-end ratio is the percentage of income that goes toward paying all recurring, minimum monthly debt payments, in addition to the monthly mortgage costs covered by the front-end ratio. Recurring monthly debt payments may include:

Lenders often look at both ratios during the mortgage underwriting process — the step when your lender decides whether you qualify for a loan. Our debt-to-income calculator looks at the back-end ratio when estimating your DTI, because it takes into account your entire monthly debt. In addition to your DTI ratio, lenders may look at your credit history, current credit score, total assets and loan-to-value (LTV) ratio before deciding to approve, deny or suspend the loan approval with contingencies.