Front-End vs Back-End DTI: What's the Difference?

When lenders evaluate your debt-to-income ratio, they actually look at two separate numbers: front-end DTI and back-end DTI. Understanding both is essential, especially when applying for a mortgage.

Front-End DTI (Housing Ratio)

Front-end DTI measures only your housing-related expenses as a percentage of gross monthly income. It includes:

• Mortgage principal and interest (or rent)
• Property taxes
• Homeowners insurance
• HOA fees
• Private mortgage insurance (PMI) if applicable

Formula: Front-End DTI = Monthly Housing Costs ÷ Gross Monthly Income × 100

Ideal target: 28% or below

Back-End DTI (Total Debt Ratio)

Back-end DTI measures all monthly debt obligations — including housing — as a percentage of gross income. It includes everything in front-end DTI plus:

• Car loan payments
• Student loan payments
• Credit card minimum payments
• Personal loan payments
• Child support and alimony
• Any other recurring debt obligations

Formula: Back-End DTI = All Monthly Debt Payments ÷ Gross Monthly Income × 100

Ideal target: 36% or below

The 28/36 Rule

The traditional lending guideline combines both ratios:

• 28: Front-end DTI should not exceed 28%
• 36: Back-end DTI should not exceed 36%

While modern lending often exceeds these thresholds, borrowers who stay within 28/36 consistently receive the best rates and terms.

Which Matters More?

For most loan types, back-end DTI is the primary metric. Here's how different loan types emphasize each:

• Conventional mortgages: Both matter, but back-end is the qualifying ratio
• FHA loans: Front-end cap of 31%, back-end cap of 43-57%
• VA loans: Focus on back-end DTI plus residual income
• Car loans and personal loans: Only back-end DTI is evaluated

Example Calculation

Consider a borrower earning $7,000/month gross:

• Mortgage payment (PITI): $1,680
• Car payment: $400
• Student loans: $250
• Credit card minimums: $120

Front-end DTI: $1,680 ÷ $7,000 = 24% ✅

Back-end DTI: $2,450 ÷ $7,000 = 35% ✅

This borrower meets the 28/36 rule and would qualify with most lenders.