DTI in Texas: How Lenders Actually Calculate What You Can Borrow
Freddie Mac’s Primary Mortgage Market Survey put the average 30-year fixed rate at 6.43% for the week ending July 2, 2026, a seven-week low. At that rate, the principal and interest payment on a $300,000 loan runs about $1,882 a month. Whether a lender will actually approve that payment for you comes down to one number more than any other: your debt-to-income ratio, or DTI. I review DTI on every file I work on across Texas, from Houston to El Paso, and it is the single most common reason a buyer qualifies for less than they expected. The good news is that DTI follows clear rules, and once you know how lenders run the math, you can often improve your number before you ever apply.
Key points:
- DTI is your total monthly debt payments divided by your gross (pre-tax) monthly income, expressed as a percentage.
- Conventional loans can go up to 50% DTI with an automated underwriting approval; many approvals land between 36% and 45%.
- FHA loans allow some of the highest ratios in the market, in some cases up to roughly 56.9% on the back end with strong compensating factors.
- Your full housing payment counts, including Texas property taxes and homeowners insurance, which is why the same income buys different amounts in different counties.
- Minimum credit card payments, car loans, and student loans count. Utilities, phone bills, and car insurance do not.
- In Texas, a community property state, a non-borrowing spouse’s debts can count on FHA and VA loans even when they are not on the application.
What is a debt-to-income ratio and how is it calculated?
Your debt-to-income ratio is your total monthly debt payments divided by your gross monthly income before taxes. If you earn $8,000 a month and your proposed house payment plus your car loan and credit card minimums total $3,600, your DTI is 45%. Lenders use this percentage, along with credit and assets, to decide how large a mortgage payment you can support.
Two details trip people up. First, lenders use gross income, so your take-home pay is irrelevant to the formula. Second, they use minimum required payments, so a $9,000 credit card balance with a $270 minimum counts as $270, no matter what you actually pay each month.
Which debts count toward your DTI in Texas?
Your DTI includes your full proposed housing payment (principal, interest, property taxes, homeowners insurance, and any HOA dues or mortgage insurance) plus minimum credit card payments, auto loans and leases, student loans, personal loans, child support, and payments on any other properties you own. It excludes utilities, phone plans, streaming services, car insurance, health insurance, and everyday living costs like groceries or child care.
The housing piece deserves special attention in Texas because our property taxes are among the higher bills in the country. Two identical incomes can qualify for noticeably different loan amounts depending on the tax rate of the specific home. A buyer in San Antonio I worked with qualified comfortably on a home with a 1.9% effective tax rate, then fell in love with a new build in a special taxing district at nearly 3%. Same price, same income, but the higher tax bill added several hundred dollars to the qualifying payment and pushed her DTI past the approval line. We fixed it by targeting homes with more typical tax rates.
One more Texas-specific wrinkle: Texas is a community property state. On conventional loans, a spouse who is not on the application generally stays out of the math. On FHA and VA loans, underwriting guidelines require the non-borrowing spouse’s debts to be counted in the DTI even though their income is not. I have seen this surprise couples where one spouse has strong income and the other carries the debt.
Front-end vs. back-end DTI: which one matters?
The front-end ratio counts only your housing payment against your income. The back-end ratio counts housing plus all other monthly debts, and it is the number that drives most approval decisions in 2026. Automated underwriting systems focus heavily on the back-end figure, so when a lender quotes you one DTI number, that is almost always the one they mean.
The old 28/36 rule of thumb remains a reasonable comfort target for your own budget, though actual approvals routinely exceed it when the rest of the file is strong.
DTI limits by loan type in 2026
Each loan program treats DTI differently. These are the common ceilings I see in practice, subject to automated underwriting findings and the strength of the overall file:
| Loan type | Typical comfortable DTI | Practical maximum | Notes |
|---|---|---|---|
| Conventional | 36% to 45% | Up to 50% with automated approval | Higher ratios usually need strong credit, reserves, or a larger down payment |
| FHA | 31% front / 43% back (manual benchmark) | Up to roughly 46.9% front / 56.9% back with AUS approval | The most forgiving mainstream program for higher DTI |
| VA | 41% benchmark | No fixed cap; residual income test governs | For eligible veterans and service members; residual income often matters more than the ratio |
These ceilings explain a pattern I see all the time at Mortgage Austin: a buyer with a 48% DTI who gets declined by a bank that caps files at 45% can still have a clean path to approval, because the underlying program allows the higher ratio when the automated findings support it.
How can you lower your DTI before you apply?
You can lower your DTI by paying down or paying off monthly obligations, increasing documented income, or reducing the proposed housing payment. Small moves matter more than people expect. Paying off a $350-a-month car loan frees up roughly $55,000 of borrowing power at current rates, because the lender re-runs the same payment math in reverse.
A few tactics that work in practice:
- Pay off small monthly payments first. A $2,000 balance with an $80 minimum hurts your ratio more per dollar than a $15,000 balance with a $250 minimum. Debts with fewer than 10 payments remaining can often be excluded entirely.
- Do not finance anything mid-process. A new car, furniture on a payment plan, or a new credit card between application and closing changes the math and can undo an approval.
- Document your real student loan payment. Income-driven repayment plans can count at the documented payment on conventional loans instead of a percentage of the balance. I covered the details in my guide to buying a home with student loans in Texas.
- Consider the whole file. Strong reserves can support a higher ratio. I wrote about how assets and income work together in a Texas approval.
- Watch the rate environment. A lower rate shrinks the proposed payment and your ratio with it. You can see where things stand this week on my Texas mortgage rates page. If rates move lower, the same income may support a larger loan, though rates may move in either direction and nothing is promised.
A Houston client last spring is a good example of sequencing. His DTI came in at 52% on the first pass. We excluded a car loan with eight payments left, moved a credit card balance to a lower-minimum account, and used his year-end bonus history to document more income. Six weeks later he closed on a conventional loan at 44% DTI, subject to the same credit and property qualifications as anyone else.
If you are not sure where your own number lands, I am happy to run the math with you. It takes a short conversation and a handful of documents, and you will know exactly what counts against you and what to do about it. Reach out and let’s talk through your options, no pressure and no obligation.
Frequently Asked Questions
What is a good DTI for a mortgage in Texas?
Under 36% is comfortable for nearly every program, and 43% to 45% is still routine when credit and assets are solid. Conventional loans can reach 50% with an automated underwriting approval, and FHA can go higher. A lower ratio generally means easier approval and more payment cushion in your budget.
Do property taxes count in my DTI?
Yes. Your qualifying housing payment includes property taxes, homeowners insurance, HOA dues, and mortgage insurance, on top of principal and interest. In Texas, where effective tax rates often run 1.6% to 3% of value depending on the county and taxing district, the tax line can swing your DTI by several points between two similarly priced homes.
Can I get a mortgage with a 50% DTI?
Sometimes. Conventional guidelines allow up to 50% with an automated approval, and FHA can allow back-end ratios up to roughly 56.9% with strong compensating factors like reserves or high credit scores. Approval at these levels is file-specific and subject to credit, income, and property qualifications.
Do student loans count toward DTI if my payment is $0?
They still count in most cases. Conventional loans can use the documented $0 or income-driven payment in many situations, while FHA generally counts 0.5% of the outstanding balance when the reported payment is zero. The right program choice can change your qualifying payment by hundreds of dollars a month.
Does my spouse’s debt count if they are not on the loan?
On conventional loans, usually no. On FHA and VA loans in Texas, yes: because Texas is a community property state, the non-borrowing spouse’s debts are counted in your DTI even though their income is not. This catches many couples off guard, so it is worth checking before you pick a loan program.
How fast can I lower my DTI?
Often within one to two months. Paying off a car loan or a high-minimum credit card changes the ratio as soon as the payoff is documented, and debts with fewer than 10 payments remaining can often be excluded right away. Income-side improvements, like averaging in a new bonus history, usually take longer to document.
Anthony Ferrando | Mortgage Loan Originator | NMLS# 1919613 | Ferrando Financial LLC NMLS# 2403080 | Licensed in Texas. This is not a commitment to lend. Loan approval is subject to credit, income, and property qualifications. DTI limits and underwriting guidelines vary by program and lender and are subject to change; figures shown are illustrative examples, not a quote or offer of credit. Rate figures are from the Freddie Mac Primary Mortgage Market Survey for the week ending July 2, 2026 and are illustrative only. Equal Housing Lender.
