How do I calculate DTI for a conventional loan?
The arithmetic is the same on any loan, but on a conventional file the ceiling you are measured against depends on how the file is underwritten. Add the new housing payment (P&I + property taxes + insurance + PMI + HOA + CDD if any) plus credit card minimums, car loans, student loans, child support, and alimony, then divide by gross monthly income. Leave out normal living expenses. Front-end DTI uses just housing; back-end uses the full debt stack.
What this actually means.
Numerator (back-end DTI): full housing payment + minimum monthly payments on credit cards, auto loans, student loans (Fannie and Freddie have specific student-loan calculation rules), personal loans, child support, alimony. Don't include groceries, fuel, utilities. Denominator: gross monthly income before taxes — base salary, plus stable overtime/bonus/commission with two-year history, plus other documented qualifying income (Social Security, pension, disability with appropriate gross-up). What separates conventional from FHA here is where the ceiling comes from: Fannie Mae's Selling Guide sets a maximum DTI of 50% for loan casefiles underwritten through Desktop Underwriter, while manually underwritten loans start from a 36% baseline that can reach 45% when specific credit-score and reserve requirements are met, and some transactions such as cash-out refinances carry their own lower limits. The same borrower can therefore calculate one DTI and get two different answers depending on whether the file runs automated or manual — and lender overlays can tighten it further. Subject to Fannie/Freddie guidelines and lender overlays.
Where this can move.
Income type and history, recurring debts shown on credit, automated vs manual underwriting, compensating factors, and overlays can change the answer.
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More conventional questions on DTI.
Educational only. Conventional loan guidelines, lender overlays, rates, fees, PMI, LLPAs, and underwriting requirements can change. Final eligibility depends on full underwriting review. Mortgage Expert, Inc. is not affiliated with Fannie Mae, Freddie Mac, FHFA, or any government agency.