Lenders use DTI to gauge whether a borrower can afford a new mortgage. The 28/36 rule is a common benchmark: housing costs ≤ 28% of gross income (front-end DTI), and total debts ≤ 36% (back-end DTI).

Conventional loans typically allow up to 43% back-end DTI; FHA loans go up to 50% in some cases.

To compute your DTI: add up monthly debt payments (mortgage, car loans, student loans, credit-card minimums) and divide by gross monthly income before taxes.