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FHA Loan DTI Requirements — How Much Debt Can You Have?

Debt-to-income ratio (DTI) measures how much of your gross monthly income goes toward debt payments. Here’s exactly how it works with FHA loans and what limits apply.

What Is DTI?

DTI is expressed as two numbers:

• Front-end ratio: Your proposed monthly housing payment (principal, interest, taxes, insurance, MIP, and HOA) divided by your gross monthly income
• Back-end ratio: All monthly debt obligations including housing, credit cards, auto loans, student loans, child support, etc., divided by gross monthly income

FHA DTI Limits

What Counts Toward Your DTI?

Must be included:

• Monthly housing payment (PITI + MIP + HOA)
• Auto loans
• Minimum credit card payments
• Student loans (even if deferred — typically 0.5% of outstanding balance if credit report shows $0)
• Child support or alimony (if owed for more than 10 months)
• Co-signed loans

May be excluded:

• Installment loans with 10 or fewer payments remaining (if cumulative payment ≤ 5% of gross income)
• Student loans fully forgiven or discharged (with documentation)

Student Loans — Important Detail

A worked example (illustrative example, not a quote)

Suppose gross monthly income is $8,000. The proposed housing payment, including principal, interest, taxes, insurance, MIP and HOA, is $2,600. Other debts are a $450 car payment, $150 in minimum card payments, and an income-driven student loan showing $0 on the credit report with a $60,000 balance, which is counted at 0.5%, or $300 a month.

• Front-end: $2,600 divided by $8,000 is 32.5%.
• Total debts: $2,600 + $450 + $150 + $300 = $3,500.
• Back-end: $3,500 divided by $8,000 is 43.75%.

That sits just above the 31% and 43% manual limits, so the loan would depend on an automated approval and the strength of the rest of the file. It is exactly the kind of case worth running before you give up.

Ways to improve the ratio

• Pay off an installment loan that has 10 or fewer payments left, or confirm whether it can be excluded under the rule above.
• Reduce card balances so the minimum payments drop.
• Add a co-borrower with documented income, or document additional qualifying income such as overtime averaged over two years.
• Look at condos or homes with lower HOA dues and taxes, since they count in the housing payment.
• Before spending savings to pay off debt, check what it does to your cash to close and reserves.

Frequently asked questions

Do groceries, utilities and subscriptions count?

No. DTI uses debts that appear on your credit report or are documented obligations, such as support payments. Everyday living costs are not included, though they still matter for your own budget.

What does it mean if the automated system says refer?

It means the file did not receive an automated approval and may be considered by a manual underwriter under the stricter 31% and 43% limits. Compensating factors and a different structure can sometimes change the result.

Should I pay off a car loan to qualify?

Not automatically. Compare the monthly payment you would remove with the savings you would use, and check whether the debt is excluded anyway. We run both versions of the numbers.

Related guides

• FHA employment and income requirements
• FHA credit score requirements
• Conventional DTI requirements
• Working out how much home you can afford
• Mortgage calculator with taxes and PMI

Practical Takeaways

• With AUS approval, back-end DTI can exceed 50%
• Manual underwriting caps at 43% back-end standard
• Student loans count even when deferred
• Work with a loan advisor to calculate your exact DTI before assuming you won’t qualify
• Run your own front-end and back-end ratios, including MIP, HOA and the student loan formula.
• A file just over 43% may still work with an automated approval and compensating factors.
• Everyday living costs are not counted in DTI.