DTI and LTV explained
Two ratios show up in nearly every mortgage file: debt-to-income (DTI) compares monthly payments to gross monthly income, and loan-to-value (LTV) compares the loan to the home’s value.
Debt-to-income, step by step
- Gross monthly income: income before taxes, as the lender calculates it under the program’s income rules.
- Housing payment: the new principal and interest, taxes, insurance, mortgage insurance or fee, and HOA dues.
- Other monthly debts: payments such as car loans, student loans, credit-card minimums, and child support, counted under the program’s debt rules. Everyday bills such as a phone, utilities, and insurance aren’t debts; see what goes in other monthly debts.
- Front-end ratio = housing payment ÷ gross monthly income.
- Back-end ratio = (housing payment + other monthly debts) ÷ gross monthly income.
Made-up illustration
Worked example
Gross monthly income $6,000; housing payment $1,650; other debts $600.
Front-end: $1,650 ÷ $6,000 = 27.5%. Back-end: ($1,650 + $600) ÷ $6,000 = 37.5%.
Try your own numbers in the DTI calculator.
The documents lenders use to verify income and debts are listed in the documents checklist.
Published guideline figures by program
These are the figures each rulebook publishes. They are reference information only: automated underwriting systems weigh the whole file, and lenders can set stricter limits.
| Program | Published figures (front / back) | Source |
|---|---|---|
| FHA, manual underwriting | Credit score 500–579 or none: 31 / 43 (33 / 45 for an energy-efficient home). Score 580+: 31 / 43 with no compensating factor (33 / 45 for an energy-efficient home); 37 / 47 with one; 40 / 40 with no discretionary debt; 40 / 50 with two. | Source: HUD Handbook 4000.1, II.A.5 (manual underwriting ratios and compensating factors) · checked Nov 9, 2026 |
| USDA | 29 / 41 of repayment income. With a ratio waiver on a manually underwritten file: up to 32 / 44, with all applicants’ validated scores at 680 or higher and at least one compensating factor. | Source: USDA Handbook HB-1-3555, Chapter 11 (rev 11-25-25), sections 11.2–11.3 · checked Nov 9, 2026 |
| Fannie Mae | Manual underwriting: 36% back-end, up to 45% with credit score and reserves per the Eligibility Matrix. Desktop Underwriter: 50% maximum. | Source: Fannie Mae Selling Guide B3-6-02, Debt-to-Income Ratios (04/02/2025) · checked Nov 10, 2026 |
| Freddie Mac | Manual underwriting: as a guideline, 36%; above 36% needs documented justification; above 45% the loan is ineligible for sale to Freddie Mac. Loan Product Advisor states no numeric maximum; it assesses the ratios itself. | Source: Freddie Mac Single-Family Seller/Servicer Guide, Section 5401.2, Monthly debt payment-to-income (DTI) ratio (effective 08/05/2026) · checked Nov 9, 2026 |
| VA | 41% is a guide that is secondary to residual income; files above 41% need a written justification unless residual income exceeds the guideline by at least 20%. | Source: VA Pamphlet 26-7 (VA Lenders Handbook), Chapter 4, Topic 10.b Debt-to-Income Ratio (KnowVA article 554400000330850, updated Aug 26, 2026); 38 CFR 36.4340 (VA underwriting standards), paragraphs (c), (d), (f)(4), (f)(5), and (g)(9) (eCFR, up to date as of Nov 6, 2026) · checked Nov 9, 2026 |
The “minimal payment increase” factor
FHA and USDA both list a compensating factor for a new housing payment that is no more than $100 or 5% above the current housing payment, whichever is less. Made-up example: current rent $1,400. 5% of $1,400 is $70, which is less than $100, so the new payment would have to be within $70 of the rent ($1,470 or less) to count.
Source: HUD Handbook 4000.1, II.A.5 (manual underwriting ratios and compensating factors); USDA Handbook HB-1-3555, Chapter 11 (rev 11-25-25), sections 11.2–11.3 · checked Nov 9, 2026How student loans are counted
| Program | Monthly payment used | Source |
|---|---|---|
| FHA | The reported payment if above $0; if $0, 0.5% of the outstanding balance, regardless of status. | Source: HUD Handbook 4000.1, II.A.4 (liabilities: student loans) · checked Nov 9, 2026 |
| USDA | The reported or documented payment if above $0; otherwise 0.5% of the balance. Loans on forgiveness plans still count. | Source: USDA Handbook HB-1-3555, Chapter 11 (rev 11-25-25), sections 11.2–11.3 · checked Nov 9, 2026 |
| VA | Excluded if deferred at least 12 months past closing. Otherwise the threshold is 5% of the balance ÷ 12 (a made-up $25,000 balance gives $104.17); the higher reported payment is used, or a lower payment on a servicer statement dated within 60 days of closing. | Source: VA Pamphlet 26-7 (VA Lenders Handbook), Chapter 4, Topic 5 Debts and Obligations: student loans (KnowVA article 554400000330850, updated Aug 26, 2026) · checked Nov 9, 2026 |
| Fannie Mae | The credit-report or statement payment; a documented $0 income-driven payment may be used; for deferred loans or loans in forbearance, 1% of the balance or the fully amortizing payment. | Source: Fannie Mae Selling Guide B3-6-05, Monthly Debt Obligations (08/05/2026) · checked Nov 10, 2026 |
Child support and alimony: as income and as a debt
Support shows up on both sides of the ratio. Support you receive can count toward income if it is documented and expected to continue. Support you pay is counted as a monthly debt, and some programs let alimony be subtracted from income instead. The rules differ by program, so the tables below show each rulebook’s own wording, summarized. For a side-by-side view with plain-English explanations, see Child support and alimony.
This is general education, not legal advice. Your decree or court order controls what you receive or owe. Questions about the order itself are for a family-law attorney; questions about how a lender will count it are for a licensed loan officer.
Support you receive (counted as income)
| Program | Documents | How long it must have been received | How long it must continue | Grossing up nontaxable child support | Source |
|---|---|---|---|---|---|
| FHA | Final divorce decree, legal separation agreement, court order, or a voluntary payment agreement with documented receipt. | Court order or decree: proof of receipt for the most recent 3 months (bank deposits, canceled checks, or child support agency records). Voluntary agreement: 12 months of canceled checks, deposit slips, or tax returns, and 6 months of consistent receipt to use the current payment. If receipt hasn’t been consistent, the lender averages the last two years (or the time received, if shorter). | At least 3 years. | Up to the greater of 15% or the borrower’s tax rate for the previous year (15% if no return was required). | Source: HUD Handbook 4000.1, II.A.4.c.xii(B) Alimony, Child Support, and Maintenance Income, and II.A.4.c.xii(P) Nontaxable Income (Grossing Up) · checked Nov 9, 2026 |
| Fannie Mae | Divorce decree or separation agreement (if the divorce isn’t final), another written legal agreement or court decree, or documentation of a state law that mandates the payments. For a separated borrower whose separation agreement doesn’t set the payments, proposed or voluntary payments aren’t counted. | At least 6 months of full, regular, and timely payments, documented for the most recent 6 months. | At least 3 years from the application date (watch the children’s ages). | Child support is nontaxable and may be grossed up: 25%, or the actual tax amount if that is higher. | Source: Fannie Mae Selling Guide B3-3.4-02, Alimony, Child Support, Equalization Payments, or Separate Maintenance (10/07/2026); Fannie Mae Selling Guide B3-3.1-01, General Income Information (10/07/2026) · checked Nov 9, 2026 |
| USDA | Final divorce decree, legal separation agreement, or court order (front and pertinent pages), plus evidence of timely receipt such as bank statements, canceled checks, or deposit slips. | Court-ordered: 6 months. Voluntary agreement: 1 year. If amounts vary, the lender uses an average consistent with the payer’s current ability and willingness to pay. | At least 3 years into the mortgage. | Tax-exempt income may be grossed up 25% for repayment income. | Source: USDA Handbook HB-1-3555, Chapter 9 (rev 08-05-25), paragraph 9.8 and Attachment 9-A (Child Support; Separate Maintenance/Alimony) · checked Nov 9, 2026 |
| VA | Verified if the borrower wants it considered. Factors include whether the payments are received under a written agreement or court decree, and the availability of procedures to compel payment. Disclosing it is voluntary. | The handbook lists the length of time the payments have been received and the regularity of receipt as factors; this subsection doesn’t set a minimum period. | Likely to continue for at least 3 years from the anticipated closing date. | Nontaxable income such as child support may be grossed up (VA says to use 125%) for the debt-to-income ratio only; residual income uses actual income. | Source: VA Pamphlet 26-7 (VA Lenders Handbook), Chapter 4: Topic 2.p (alimony, child support, and maintenance income), Topic 5.b (support obligations), Topic 9 (grossing up nontaxable income) (KnowVA article 554400000330850, updated Aug 26, 2026); 38 CFR 36.4340 (VA underwriting standards), paragraphs (c), (d), (f)(4), (f)(5), and (g)(9) (eCFR, up to date as of Nov 6, 2026) · checked Nov 9, 2026 |
| Freddie Mac | Documentation that the payor is obligated to make the payments. The monthly amount used is “the documented fixed monthly payment amount.” | “Payments in the full amount must have been consistently received for the most recent six months.” Not used if the payor has been obligated for less than six months, the payments are not for the full amount, or they are not received on a consistent basis. | The payor must be obligated to make payments to the borrower for at least three years from the Application Received Date. | Child support is excepted from the tax-exempt documentation requirement. The Guide’s worked example of a gross-up: $2,000 at a 30% tax rate gives $2,600. | Source: Freddie Mac Single-Family Seller/Servicer Guide, Section 5305.1, Requirements for all other income (non-employment/non-self-employment), part (b) (effective 08/05/2026) · checked Nov 9, 2026 |
USDA also counts support expected in the next 12 months in household income for its income limit, which is a separate test from repayment income.Source: USDA Handbook HB-1-3555, Chapter 9 (rev 08-05-25), paragraph 9.8 and Attachment 9-A (Child Support; Separate Maintenance/Alimony) · checked Nov 9, 2026
Support you pay (counted as a debt)
| Program | Child support | Alimony or spousal support | Source |
|---|---|---|---|
| FHA | A recurring monthly liability. The amount used is the greater of the amount in the most recent decree or agreement, or the monthly garnishment. The lender gets the signed decree, agreement, or order and pay stubs covering at least 28 consecutive days to check for garnishment. | Counted as a debt unless the lender already reduced the borrower’s income by the alimony amount. | Source: HUD Handbook 4000.1, II.A.4.b.iv(E) Alimony, Child Support, and Maintenance · checked Nov 9, 2026 |
| Fannie Mae | Counted as a monthly debt when a decree, separation agreement, or other written legal agreement requires it and payments continue for more than ten months. Voluntary payments don’t need to be counted. | Same, but the lender may instead reduce income by the alimony, equalization, or separate maintenance amount rather than adding it to debts. | Source: Fannie Mae Selling Guide B3-6-05, Monthly Debt Obligations (08/05/2026): Alimony, Child Support, Equalization Payments, and Separate Maintenance Payments · checked Nov 9, 2026 |
| USDA | Court-ordered debts, including child support, alimony, and garnishments, are included unless the borrower has a release of liability. The lender documents the monthly amount and how long it lasts from the order. Ten or fewer payments remaining may be left out if the payment is no more than 5% of monthly repayment income. | Handled the same way as other court-ordered debts. The handbook section doesn’t describe an income-reduction option. | Source: USDA Handbook HB-1-3555, Chapter 11 (rev 11-25-25), paragraph 11.2 B.5, Court Ordered Debts · checked Nov 9, 2026 |
| VA | The payment amount must be verified, and child support is treated as a liability. The lender doesn’t request divorce papers unless needed to verify the amount. | Verified the same way; spousal support may be treated as a reduction in income instead of a debt. | Source: VA Pamphlet 26-7 (VA Lenders Handbook), Chapter 4: Topic 2.p (alimony, child support, and maintenance income), Topic 5.b (support obligations), Topic 9 (grossing up nontaxable income) (KnowVA article 554400000330850, updated Aug 26, 2026); 38 CFR 36.4340 (VA underwriting standards), paragraphs (c), (d), (f)(4), (f)(5), and (g)(9) (eCFR, up to date as of Nov 6, 2026) · checked Nov 9, 2026 |
| Freddie Mac | Counted as a monthly debt when more than 10 months of payments remain. If the file documents 10 or fewer months remaining, the payment may be left out of the DTI ratio. | With more than 10 months remaining, the payments are not added to debts; they “must be deducted from the Borrower’s stable monthly income.” With 10 or fewer months documented as remaining, the payment may be left out of the DTI ratio. | Source: Freddie Mac Single-Family Seller/Servicer Guide, Section 5401.2, Monthly debt payment-to-income (DTI) ratio (effective 08/05/2026) · checked Nov 9, 2026 |
Made-up illustration
Why the alimony option changes the math
Gross monthly income $6,000; housing payment $1,650; alimony paid $500.
Counted as a debt: front-end $1,650 ÷ $6,000 = 27.5%; back-end ($1,650 + $500) ÷ $6,000 = 35.8%.
Subtracted from income instead: income becomes $5,500; front-end and back-end are both $1,650 ÷ $5,500 = 30.0%.
Which method applies is up to the program and the lender.
Loan-to-value, step by step
- Value: generally the lower of the purchase price and the appraised value.
- LTV = first mortgage amount ÷ value.
- CLTV (combined LTV) = all loans secured by the home (first mortgage plus any second liens) ÷ value.
FHA calls its value the Adjusted Value: the lesser of the purchase price minus any inducements to purchase, or the appraised value.Source: HUD Handbook 4000.1, II.A.2 (Adjusted Value) · checked Nov 10, 2026
Fannie Mae’s guide also uses the lower of the sales price or appraised value for purchases.Source: Fannie Mae Selling Guide B2-1.2-01, Loan-to-Value (LTV) Ratios · checked Nov 10, 2026 The property-tax value isn’t part of this; see Tax value vs. sale price vs. appraisal.
Made-up illustration
Worked example: FHA
Price $300,000 with 3.5% down ($10,500). Base loan = $289,500, so LTV = 96.5%. The upfront premium is 1.75% × $289,500 = $5,066.25; added to the loan, the total is $294,566.25. With a term over 15 years and a base loan at or below $726,200, LTV above 95% puts the annual MIP at 0.55% for the life of the loan.
Source: HUD Handbook 4000.1, Appendix 1.0 – Mortgage Insurance Premiums (03/20/2023) · checked Nov 9, 2026Try your own numbers in the LTV calculator.
Guidelines change; confirm with a licensed lender.