Lender DTI vs. take-home DTI: the number that matters to you
Lenders measure debt against gross income. Your life runs on net income. Here's why the difference decides whether a home fits.
What lenders measure
Debt-to-income (DTI) divides your monthly debts by your gross monthly income — before taxes and deductions. FHA can allow a back-end DTI near 57%; conventional loans commonly cap around 45%.
What you actually live on
Take-home pay is often 20–30% lower than gross. A payment that is 45% of gross income can be 60% or more of what lands in your account.
Net-income DTI = monthly housing payment plus debts ÷ take-home pay. This is the number that tells you whether you can still save.
Focus on cash flow
After the full payment — principal, interest, taxes, insurance and any HOA or mortgage insurance — what is left each month? If the answer is near zero, the house will own you. Qualifying is the lender's test; positive cash flow is yours.
Run your own numbers
See your payment, take-home DTI, cash to close and six-month reserves.