DTI (Debt-to-Income Ratio)
The percentage of your gross monthly income that goes toward debt payments. Front-end DTI covers housing costs only (PITI); back-end DTI includes all recurring debts. The traditional benchmark is the 28/36 rule: no more than 28% on housing, 36% total. Conventional lenders typically allow up to 43–45% back-end DTI with compensating factors.
How does this affect your loan? Estimate self-employed qualifying income with the DTI calculator, or read the self-employed mortgage guide.
Related terms
- Qualifying income — The income figure a lender actually uses when calculating your DTI — not your gross revenue, not your total de…
- Schedule C — The IRS form where sole proprietors and single-member LLCs report business income and expenses. Conventional l…
- Net income — Income after all business deductions. On a tax return, this is Schedule C net profit. It’s the number conventi…
- Form 1084 — Fannie Mae’s self-employed income analysis worksheet. Lenders use it to standardize how they calculate qualify…
- 2-year average — How conventional lenders handle self-employed income variability: they average qualifying income across the tw…
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Educational definition only — not financial, legal, or tax advice. Programs and limits change; verify current terms with a licensed professional.