What Is the Maximum Debt-to-Income Ratio for a Conventional Loan?
Your debt-to-income ratio — the percentage of your gross monthly income that goes toward debt payments — is one of the biggest factors in whether you qualify for a conventional loan. Here is how lenders calculate it and what the limits are.
What is a debt-to-income ratio?
Your DTI ratio compares your total monthly debt obligations to your gross (pre-tax) monthly income. Lenders focus on the back-end ratio: housing payment plus all other monthly debts — car loans, student loans, minimum credit card payments, child support, and so on.
Maximum DTI limits
- Automated underwriting (DU or LPA): Maximum DTI of 50%. DU evaluates the full risk profile — a borrower with strong credit and large reserves may be approved at 50% DTI even when other factors are moderate.
- Manually underwritten loans: Maximum DTI of 36% under standard Fannie Mae guidelines, extendable to 45% if the borrower meets the credit score and reserve requirements in the Eligibility Matrix.
What counts in your DTI?
Included: mortgage payment (PITI plus HOA), car loans, student loans, minimum credit card payments, child support or alimony with more than 10 months remaining, personal loans. Not included: utilities, subscriptions, and insurance premiums.
Auto and other lease payments must be included regardless of how many months remain. Student loans with 10 or fewer remaining payments may be excluded. Revolving balances being paid off at closing also do not need to be counted.
Non-occupant co-borrowers and DTI
If you add a non-occupant co-borrower on a manually underwritten loan, the maximum DTI for the occupying borrower using only their own income drops to 43%. This is a firm limit under Fannie Mae guidelines.
Key takeaways
- Maximum DTI through automated underwriting (DU or LPA): 50%.
- Manually underwritten loans: 36% standard, extendable to 45% with compensating factors.
- Leases are always counted in DTI; installment debts with 10 or fewer payments can be excluded.
- Non-occupant co-borrower on a manual underwrite: occupying borrower DTI capped at 43%.
- Child support or alimony with more than 10 months remaining must be included in DTI.
- Business debt paid entirely by the business may be excluded if properly documented.
Ready to explore your conventional loan options? Lendia can walk you through what you qualify for and find the right program for your goals.