Most people obsess over their credit score and completely ignore the second number every lender checks right after it: the debt-to-income ratio, or DTI. You can have a 780 credit score and still get denied for a mortgage, a business loan, or a line of credit if your DTI is too high — because the score tells the lender whether you pay your bills, but the DTI tells them whether you can actually afford one more. At Blueprint Business Advisors, Damon Boswell and Ashley Boswell help clients understand both sides of that equation, because funding readiness is never just about one number. Here is an honest, web-researched look at what your debt-to-income ratio actually is, how lenders calculate it, what counts as a good number in 2026, and the real strategies that lower it.
What Is a Debt-to-Income Ratio?
Your debt-to-income ratio is the percentage of your gross monthly income that goes toward paying debt each month. According to Experian, your DTI is the total of your monthly debt payments divided by your gross monthly income — that is, your income before taxes and other deductions are taken out. It is one of many factors lenders consider to determine your eligibility for a loan or a credit card, and it is a vital indicator of your financial health. 'Your credit score answers the question, Will this person pay us back?' explains Damon Boswell. 'Your DTI answers the question, Can this person afford to pay us back? A great score with a broken DTI still gets you a no.'
How to Calculate Your DTI
The math is straightforward. According to Chase and U.S. Bank, the formula is: add up all of your monthly debt payments, divide that total by your gross monthly income, and multiply by 100 to express the result as a percentage. According to Experian, you use the minimum payments for revolving credit such as credit cards. For example, if you earn $6,000 a month before taxes and you pay $1,500 for your mortgage, $200 for an auto loan, and $300 for remaining debts, your total monthly debt is $2,000. Divide $2,000 by $6,000 and you get 0.33 — multiply by 100 and your DTI is 33%. 'We sit down with clients and run this number with their real figures,' says Ashley Boswell. 'People are almost always surprised by the result, because they forget debts they do not think about — store cards, a personal loan, a co-signed student loan.'
What Counts as Debt (and What Does Not)
This is where people get tripped up. According to U.S. Bank, only debts are used to calculate your DTI — not recurring expenses like groceries, utilities, childcare, or insurance premiums. The debts that typically count include your mortgage or rent payment, credit card minimum payments, auto loans, student loan payments, personal loans, child support, and any other monthly debt obligation. According to Wells Fargo, rent is also considered a monthly debt payment for DTI purposes. 'The mistake we see most often is people adding their phone bill and grocery budget into the calculation,' notes Damon Boswell. 'Those are expenses, not debts. Lenders are only looking at money you owe to creditors.'
Front-End DTI vs. Back-End DTI
If you are applying for a mortgage, lenders actually calculate two versions of your DTI. According to Experian, the front-end DTI examines how much of your gross income goes toward housing costs alone — including your mortgage payment, property taxes, and homeowners insurance. The back-end DTI compares your gross income to all of your monthly debt payments, including housing, credit cards, auto loans, student loans, and any other type of debt. 'Most lenders rely on the back-end ratio,' explains Ashley Boswell. 'That is the number that tells the full story, because it captures every obligation competing for your income — not just the roof over your head.'
What Is a Good DTI Ratio in 2026?
According to Experian, a back-end DTI of 35% or less generally indicates that you are managing your debt payments comfortably and have enough cash flow left over for other expenses and financial goals. According to Investopedia, as cited by Sallie Mae, lenders will usually look for a DTI of 36% or less to consider you a qualified borrower. Chase notes that generally a good debt-to-income ratio is lower than 36%, but that does not mean a higher DTI will automatically disqualify you. According to Wells Fargo, a DTI of 36% to 49% means you are adequately managing your debt but may want to consider lowering it, while 50% or more means more than half of your pre-tax income is going toward debt payments and lenders may limit your borrowing options. 'We tell clients to aim for 36% or lower as the target,' says Damon Boswell. 'Below that, you look like a safe bet. Above 50%, your options shrink dramatically.'
The Mortgage DTI Ceiling: 50%
For conventional mortgage loans, the ceiling has moved over the years. According to Chase, some conventional loans backed by Fannie Mae and Freddie Mac now accept a DTI as high as 50% if the loan goes through automated underwriting. According to the Fannie Mae Selling Guide, for manually underwritten loans the maximum DTI is 45%, and if a recalculated DTI exceeds 45% for a manually underwritten loan or 50% for a Desktop Underwriter loan casefile, the loan is not eligible for delivery to Fannie Mae. 'Fifty percent is the absolute ceiling, not the goal,' warns Ashley Boswell. 'A lender may let you close at 49% DTI, but that means half your gross income is spoken for before taxes even come out. That is a fragile place to live.'
Why DTI Matters Beyond Mortgages
DTI is not just a mortgage number. According to Experian, creditors use your DTI, along with your income, credit score, credit history, and other factors, to determine whether to approve your credit application, how much you can borrow, and what your loan terms will look like. Higher DTIs typically result in higher interest rates and fees and may even cause your application to be denied. This matters directly for the business and personal funding work we do at Blueprint Business Advisors — because when we help package an application for a lender, the DTI is one of the first numbers that lender runs. 'A clean credit profile gets you in the door,' explains Damon Boswell. 'A healthy DTI is what gets you the approval and the better terms. We help clients prepare for both.'
Does DTI Affect Your Credit Score?
Here is a common point of confusion. According to Experian, your debt-to-income ratio has no impact on your credit score, particularly because your income is not a factor in credit-scoring models. Your monthly debt payments do appear on your credit reports, which is how lenders are able to calculate the ratio — but the ratio itself is not scored. That said, lowering your ratio can indirectly improve your credit score. For example, if you paid off a credit card balance, you would simultaneously lower your DTI and your credit utilization rate, which is a crucial factor in your FICO Score. 'DTI and credit utilization are cousins,' notes Ashley Boswell. 'Paying down a card helps both at the same time — one for the lender, one for the bureau.'
The Most Common DTI Calculation Mistake
According to U.S. Bank, one of the most common mistakes people make when calculating their DTI is not including the estimated new mortgage payment — or using an inaccurate estimate. If you are calculating your DTI to see whether you can afford a home, you have to include the projected mortgage payment you would be taking on, not just your current debts. 'People run their DTI without the new payment and think they are fine,' says Damon Boswell. 'Then the lender adds the mortgage and the number jumps past 50%. Always calculate with the new obligation included.'
Honest Strategies to Lower Your DTI
There are no gimmicks here — only two real levers, and you can pull either or both. According to Chase, because your DTI compares your monthly debt payments to your gross monthly income, you can potentially improve it by reducing what you owe, increasing your earnings, or a combination of both. According to Sallie Mae, if your income remains the same and you need to lower your DTI for a new loan, paying off some debt will lower your DTI rate — and your DTI will also be lower if your debt remains the same but your income increases. 'It really is that simple and that hard,' says Ashley Boswell. 'You either owe less or earn more. Anyone selling you a third option is selling you a story.'
Strategy 1: Pay Down Debt Aggressively
The fastest way to lower your DTI is to eliminate monthly payments entirely. Paying off a car loan removes that payment from the calculation. Paying down a credit card reduces the minimum payment that counts toward your DTI — even if you do not pay it off completely. According to Wells Fargo, paying off your debts sooner may improve your DTI ratio faster, freeing up money in your budget for saving or spending. 'We help clients prioritize which debt to attack first based on which one moves the DTI the most,' explains Damon Boswell. 'Sometimes it is the smallest balance you can wipe out completely. Sometimes it is the card with the highest minimum. The math tells us which.'
Strategy 2: Avoid Taking on New Debt Before Applying
According to Sallie Mae, you should avoid adding more debt in the near future if you can, or postpone large purchases until your financial situation improves. This is critical timing advice: do not finance a car, open new credit cards, or co-sign a loan in the months before a mortgage or business funding application. 'We have watched clients blow up their own approval chances by financing furniture the week before closing,' warns Ashley Boswell. 'Every new payment you add raises your DTI. Lock down your borrowing until after the deal is done.'
Strategy 3: Increase Your Income
The other lever is income. A raise, a second job, a side business, or a working spouse joining the application can all lower your DTI by increasing the denominator. According to Chase, lenders also look at the history and trajectory of your debt-to-income ratio — so a sudden jump in income will prompt questions about whether it is stable and recurring. 'Lenders want to see income that is likely to continue,' notes Damon Boswell. 'A one-time bonus does not help you the way a permanent raise does. Document the stability.'
Strategy 4: Refinance or Consolidate to Lower Payments
According to Wells Fargo, you may be able to lower your monthly payments and adequately manage your debts by refinancing or consolidating. Extending a loan term lowers the monthly payment — which lowers your DTI — though it increases the total cost of the loan over time. 'Refinancing to lower a monthly payment can help your DTI in the short term,' explains Ashley Boswell. 'But we always review the total repayment with the client, because a lower payment today can mean paying thousands more over the life of the loan. The trade-off has to make sense.'
How DTI Connects to Our Funding Work
At Blueprint Business Advisors, DTI is woven directly into our funding concierge approach. Instead of sending you from lender to lender, we review your profile, identify suitable funding options, and help package your application correctly. That includes reviewing your personal and business credit, your income, your revenue, and your bank statements — and calculating your DTI before a lender does, so there are no surprises. 'We run the same math the lender will run,' says Damon Boswell. 'If your DTI is too high for the product you want, we tell you before you apply — and we help you build a plan to bring it down.' We help qualified clients pursue appropriate personal and business funding opportunities. Funding amounts vary according to creditworthiness, income, revenue, lender criteria, and repayment ability. No minimum approval amount is guaranteed.
How DTI Connects to Credit Repair and Building
This is where the services connect. If inaccurate items on your credit report are inflating your apparent debt load — a collections account you already paid, a loan that was discharged — disputing and removing those inaccuracies can indirectly improve your DTI by removing payments that should not be there. And the credit-building side matters too: a stronger credit profile often unlocks lower interest rates, which lower your monthly payments, which lower your DTI. 'Credit repair, credit building, and DTI management are three legs of the same stool,' explains Ashley Boswell. 'Fix the report, build the profile, and manage the ratio — and you become the borrower lenders want to approve.' We dispute inaccurate, outdated, or unverifiable information with the bureaus; we do not guarantee the removal of any specific item, any particular credit-score increase, or any specific outcome.
How DTI Connects to Financial Coaching
Lowering your DTI is fundamentally a cash flow exercise — and that is exactly what our financial coaching service addresses. Damon Boswell and Ashley Boswell work with clients on real budgets, real spending filters, and real debt-paydown plans that move the DTI number over time. 'Coaching is where the DTI actually gets fixed,' says Damon Boswell. 'We can tell you the number and the strategy, but the coaching is what keeps you executing the plan month after month until the ratio moves.' We are not a lender, and we do not provide tax or legal advice; consult a qualified professional for those needs.
The Bigger Picture: DTI as Part of Funding Readiness
Funding readiness is never one number. It is your business structure, your credit profile, your documentation, your revenue, your cash flow, and your DTI — all working together. A great credit score with a broken DTI gets you denied. A great DTI with a broken credit score gets you denied. The entrepreneurs who get approved are the ones who understand the full picture and prepare for every piece of it. 'DTI is the number people forget — and it is the number that quietly kills more applications than any other,' notes Ashley Boswell. 'We make sure it is never the reason you hear no.'
How Blueprint Business Advisors Helps
Damon Boswell and Ashley Boswell review the client's business structure, credit profile, financial documentation, and goals. We may help establish business credit accounts, monitor reporting, identify potential financing sources, and package applications. As part of that process, we help you understand your DTI, calculate it the way a lender will, and build a realistic plan to improve it — through debt paydown, spending discipline, income growth, and strategic refinancing where appropriate. We are not the lender, and all approvals, limits, rates, and terms are determined by third-party creditors. 'Our goal is to help you become funding-ready and connect you with financing options that fit your business,' says Ashley Boswell. 'We cannot guarantee approval, but we can help you understand and prepare for the process.'
Start With a Free Consultation
If you have been denied for a loan and do not know why — or if you want to understand your DTI before a lender runs it — it is time to get a real roadmap. Book a free, no-pressure consultation with Damon Boswell and Ashley Boswell at Blueprint Business Advisors. We will review your credit, your income, your debts, and your goals, and help you understand exactly where your DTI stands and what it will take to move it. The number lenders check second deserves the same attention as the one they check first.
Important Disclaimer
Blueprint Business Advisors is not a lender. We assist with preparation and placement only. All approval decisions, rates, amounts, and terms are determined by third-party lenders and creditors. We do not guarantee approval, any specific funding amount, a particular credit-score increase, or any specific outcome. The DTI guidelines, thresholds, and calculations cited are based on publicly available information from Experian, Chase, U.S. Bank, Wells Fargo, Sallie Mae, Investopedia, and the Fannie Mae Selling Guide, and are educational, not a guarantee of individual results or loan eligibility. DTI requirements vary by lender, loan product, and individual circumstances. We are not affiliated with Fannie Mae, Freddie Mac, or the U.S. Small Business Administration. Consult a qualified tax professional or attorney for tax and legal matters specific to your situation.
