What Counts as Debt in a DTI Calculation, and What Doesn't
DTI counts recurring, fixed debt payments — a mortgage or rent, car loans, student loans, minimum credit card payments, and personal loans. It excludes everyday variable expenses like groceries, utilities, subscriptions, and insurance, even though those are real ongoing costs — DTI is specifically a measure of debt obligations, not total spending.
This distinction trips people up constantly, since "debt" in everyday conversation often includes any recurring bill, while DTI has a much narrower, specific definition.
What counts
Mortgage or rent payment, car loan payments, student loan payments, minimum credit card payments, personal loan payments, and any other loan with a fixed recurring payment all count toward the debt side of a DTI calculation.
What doesn't count
Groceries, utilities, insurance premiums, subscriptions, childcare, and other everyday living expenses — while genuinely real ongoing costs that affect actual affordability — are not included in a standard DTI calculation. This is exactly why DTI can approve an amount that doesn't feel comfortable once all of a household's actual expenses are considered, a gap covered in more detail in the home affordability guide.
A gray area worth knowing: credit card minimums vs. balances
For credit cards specifically, DTI typically counts only the minimum payment currently due, not the total balance owed — meaning a large balance with a small minimum payment contributes less to DTI than the total debt might suggest, which is a genuine quirk of how the ratio is calculated.