Everyone knows that DTI is imperfect, but one thing it does is make an assessment of whether a borrower can repay.

Typically, lenders want to see your front-end ratio of 28% and the back-end ratio of 36%. Meanwhile, lenders may or may not consider your front-end ratio. The reason is simple, the back-end one gives lenders a big-picture view of your finances.

Different lenders have different DTI requirements, yet, the 28% rule for the front-end ratio is one of the most common.

In the example above, if your proposed monthly rent (or mortgage) payment makes $1,200 of your $6,000 in monthly gross income, your front-end ratio would be 20%. That means your total housing costs should not exceed $1,680 ($6,000 x 0.28 = $1,680).

Since the front-end ratio includes only your rent (or mortgage) payment, the back-end ratio represents all your monthly debts. Here comes also loan payments, child support, alimony, and credit card debts. Thus, applying the 36% rule, your total monthly payments in the example above should not be more than $2,160 ($6,000 x 0.36 = $2,160).

Yet, some lenders will allow you to apply for a loan even with a back-end ratio of 43%. Thus, according to the recent FHA guidelines, debt to income ratios for FHA loans is 31% front-end and 43% back-end.