That number is your debt-to-income ratio, or DTI.
It's the share of your monthly gross income that goes toward debt payments, and it has quietly become one of the biggest hurdles standing between ordinary buyers and a mortgage approval in 2025.
Add up your minimum monthly payments on credit cards, auto loans, student loans, personal loans, and any proposed housing payment — principal, interest, taxes, and insurance.
Divide that by your gross monthly income before taxes.
If the result tops roughly 43%, many conventional loans fall out of reach, and some lenders cut you off closer to 36% for the best rates.
The catch is that housing costs ate a much bigger slice of the pie over the past few years.
With the average 30-year fixed rate hovering near 6.5% and home prices still elevated, a modest starter home can push a household with no other debt close to that ceiling on its own.
Add a $400 car payment and a couple of credit cards, and the door can close fast.
What trips people up is which debts count.
Lenders generally use the minimum payment shown on your statement, not what you actually pay.
That $8,000 credit card balance with a $160 minimum hurts your ratio even if you pay $500 a month.
Student loans can be especially confusing: many lenders use 1% of the balance or your documented payment, whichever is higher, which can swing your ratio by several points.
There are legitimate ways to move the needle before you apply.
Paying down a credit card balance lowers the minimum payment and the ratio at the same time.
Paying off a small auto loan entirely can erase that payment from the calculation.
Avoiding new financing — a car, furniture, or a balance transfer card — for six months before applying keeps your profile clean.
And a larger down payment can shrink the loan amount enough to bring the housing payment down.
One strategy worth knowing: lenders can sometimes approve a borrower above 43% DTI if there are "compensating factors," such as substantial cash reserves, a long history of on-time payments, or a smaller loan relative to the home's value.
Fannie Mae and Freddie Mac allow DTI up to 50% in certain automated underwriting cases.
That's not a green light — it usually means a higher rate or stricter terms — but it's not an automatic no either.
A quick gut check: if your total monthly debts plus an estimated housing payment exceed about 36% of your gross pay, expect friction.
If you're above 45%, plan to pay something down before you shop.
A mortgage broker can run your specific numbers in minutes and tell you exactly which debts are dragging you down. **Our take:** DTI is boring, unglamorous, and more decisive than most buyers realize — it decides your approval long before your credit score does.
Final Thoughts
Spend an hour with a calculator before you spend a weekend touring open houses, and you'll save yourself a lot of heartbreak.