Debt-to-Income Ratio for a Seattle Mortgage: What Counts as Debt

Your debt-to-income ratio for a Seattle mortgage is your monthly debt payments, including the new house payment, divided by your gross monthly income. It is one of the first numbers an underwriter reads. What surprises most buyers is not the formula but the list: which payments go into it, which stay out, and which ones you can still change before you apply.

Debt-to-income, or DTI, comes up on nearly every page of this site, usually as one sentence inside another topic. This page is the one they point to. It covers the two ratios in plain words, what goes into the house payment, which debts count and which do not under Fannie Mae, FHA and VA rules, what each program's written limit is, and the three levers that move the number before you apply.

For this page I read Fannie Mae's Selling Guide liability chapter (sections B3-6-02, B3-6-03, B3-6-05 and B3-6-07), HUD Handbook 4000.1 in its current update, and the VA's underwriting regulation at 38 CFR 36.4340, on October 15, 2026. Freddie Mac has its own guide, and lenders can set rules stricter than any of them. I confirm the exact treatment on your file.

How the Debt-to-Income Ratio for a Seattle Mortgage Is Figured

There are two ratios, and you will hear both.

• The housing ratio (also called the front-end ratio) is the new monthly house payment divided by gross monthly income. FHA's handbook calls it the payment-to-income ratio and sets a limit for it on manually underwritten loans.
• The total ratio (the back-end ratio, or just DTI) is the house payment plus every other monthly debt that counts, divided by the same income. Fannie Mae's guide sets a limit on this total ratio only.

Income here means gross monthly income before taxes, and only the income used to qualify. If a bonus, overtime or self-employed income cannot be counted yet, it is not in the denominator, even if it shows up in your bank account. My guides to RSU and bonus income, contract and agency W-2 income and the self-employed two-year rule cover what makes income count. This page is about the top of the fraction.

What Goes Into the House Payment on a Seattle Mortgage

The house payment in your Seattle debt-to-income ratio is more than principal and interest. Fannie Mae's guide (B3-6-03) lists the pieces, and FHA's handbook lists nearly the same ones:

• principal and interest on the new loan;
• property taxes, which in King County are set by the levy rates where the home sits;
• homeowners insurance, plus flood insurance if the home needs it;
• mortgage insurance, if the loan carries it;
• homeowners or condominium association dues, and any special assessments;
• ground rent, if any; and
• the payment on any second mortgage closing with the first.

Association dues are where Seattle condo buyers feel this most. A South Lake Union or Eastlake building with high monthly dues can move the ratio as much as a car payment does. Fannie Mae counts the dues but excludes any utility charge billed to your individual unit, and FHA lets the documented utility portion of a condo fee come out before the ratios are figured. The South Lake Union guide walks through how dues change a purchase price, so I will not repeat that math here.

Which Debts Count in Your Debt-to-Income Ratio

Here is what the current guides say goes into the total, with the program differences that matter most.

• Installment loans such as car loans, personal loans and timeshares. Fannie Mae counts them when more than ten payments remain. FHA counts all of them, except closed-end debts that will be paid off within ten months of closing and that together come to 5 percent of gross monthly income or less. VA treats debts running ten months or longer as the ones deducted from income, and still weighs a large short-term payment.
• Credit cards and other revolving accounts, at the minimum payment on the credit report. If no payment is shown, both Fannie Mae and FHA can use 5 percent of the balance unless a statement shows a lower required payment.
• Leases. Fannie Mae counts a car lease no matter how few months are left, because a lease usually ends in a new lease or a purchase.
• Student loans, under rules that differ more by program than any other debt. My student loans guide lays out each one, including income-driven plans and deferment.
• Deferred debts. Fannie Mae and FHA both count a debt in deferment or forbearance, using the payment that will start, or a calculated one when the documents do not show it.
• Child support and alimony you pay. Child support counts as a debt under Fannie Mae and FHA. For alimony, both allow the lender to subtract it from your income instead of listing it as a payment.
• A HELOC that requires a payment, and the payment on any home you own and are keeping. If you are buying before selling, my buy-before-you-sell guide covers how the departing home's payment is handled.
• IRS installment agreements and garnishments. Fannie Mae counts an approved IRS payment plan's payment and any garnishment with more than ten months left.

What Usually Stays Out of a Seattle Mortgage DTI

A lot of what you pay every month is not debt to an underwriter. FHA's handbook lists obligations it does not count, and Fannie Mae's list of what it counts leaves the same items off.

• Utilities, phone and internet.
• Child care. FHA's handbook names it as not a debt, along with commuting costs and union dues.
• Insurance other than property insurance, such as car, health and life premiums.
• Retirement contributions, including your 401(k) deferral.
• Charge cards paid in full each month. Fannie Mae leaves 30-day accounts out of the ratio but wants the funds to cover the balance verified. FHA leaves them out if the account was paid in full every month for the past 12 months.
• A loan against your own 401(k). Fannie Mae does not count a loan secured by your own financial assets as a monthly debt, once the loan document shows the account as collateral; it does reduce the account's value if you use it for reserves. FHA's handbook takes the same approach of reducing the account balance by the loan.

That a cost is left out of the ratio does not mean it is left out of your budget. Child care in Seattle can be the second-largest bill a young family pays. The ratio decides what a lender will approve; you decide what you are comfortable paying.

Co-Signed Loans, Spouses, and Business Debt

Three situations change what counts, and each one turns on documents.

A loan you co-signed. If you co-signed a car loan for a sibling or a student loan for a child, it is on your credit report and starts out counted. Fannie Mae lets the lender leave it out when someone else is making the payments and 12 months of their canceled checks or bank statements show no late payments. FHA treats it as a contingent liability and can leave it out when the other obligated party has made 12 months of timely payments. A debt assigned to an ex-spouse by a divorce decree follows its own rule under both programs; my divorce guide covers it.

Your spouse's debts on an FHA loan. Washington is a community property state, and FHA's handbook requires the debts of a non-borrowing spouse to be counted in your ratios unless state law specifically excludes them. Your spouse's credit history is not a reason to deny the loan, but their payments are in your number. This does not apply to conventional loans. The marriage and mortgages guide covers the rest.

A business debt in your name. If you are self-employed and your business pays a loan that shows on your personal credit, Fannie Mae and FHA can both leave it out once the business's payment is documented (Fannie Mae's example is 12 months of canceled company checks) and the business's cash flow already accounts for it.

If a partner or a parent is joining the loan, their income and their debts both come in. My co-borrower guide explains how the two combine.

Debt-to-Income Ratio Limits by Mortgage Program

Every program has a written ceiling, and automated underwriting decides inside it. Here is what each guide says, read October 15, 2026.

• Conventional (Fannie Mae). For loans run through Desktop Underwriter, the maximum total ratio is 50 percent. For manually underwritten loans, the maximum is 36 percent, and it can go to 45 percent when the borrower meets additional credit and reserve requirements in Fannie Mae's eligibility matrix (B3-6-02).
• FHA. FHA files are first scored by FHA's automated TOTAL Mortgage Scorecard, which weighs the ratio along with the rest of the file. When a file is referred for manual underwriting, the handbook's base limits are 31 percent for the housing ratio and 43 percent for the total. They rise to 37 and 47 percent with one documented compensating factor, and to 40 and 50 percent with two, such as cash reserves of at least three months of payments, a new payment no more than $100 or 5 percent above your current one, or residual income.
• VA. The regulation's standard is a 41 percent total ratio, measured alongside residual income, the money left each month after the house payment and debts. A ratio above 41 percent needs a written justification from the underwriter's supervisor, unless residual income beats the VA guideline by at least 20 percent. My VA loans guide lists the residual income figures for Washington.
• Jumbo. Loans above the 2026 King County limit of $1,063,750 follow the lender's own guidelines, which are often stricter than the agency limits. The Seattle jumbo guide covers them.

Two cautions. First, the limit on paper is not the approval. A file at 44 percent with strong reserves and a long work history reads very differently from one at 44 percent with none, and your credit history is one of the factors weighed. Second, a lender can set a lower ceiling than the agency does. The number that matters is the one on your actual file, subject to qualification.

An Illustrative Seattle Debt-to-Income Example

This example is illustrative only, with figures chosen for easy math on October 15, 2026. It is not a quote and uses no interest rate.

Two buyers with $15,000 in combined gross monthly income are looking at a South Lake Union condo. The full house payment, with principal and interest, King County property taxes, insurance and association dues, comes to $5,200. They also pay $480 a month on a car loan with eight payments left, $310 on student loans and $160 in credit card minimums.

• Housing ratio: $5,200 divided by $15,000 is 34.7 percent.
• Total ratio with every debt counted: $6,150 divided by $15,000 is 41.0 percent.
• Total ratio without the car loan: $5,670 divided by $15,000 is 37.8 percent.

Whether the car loan drops out depends on the program. Under Fannie Mae's guide, a debt with ten or fewer payments left generally does not count, unless the payment significantly affects the buyers' ability to pay. Under FHA's handbook, it can drop out because it ends within ten months and $480 is under 5 percent of their income ($750). Under the VA regulation, a short-term debt that heavily affects the family's budget is still weighed. Same buyers, same car, three different answers, which is why I run the file on each program before recommending one.

How to Lower Your Debt-to-Income Ratio Before You Apply in Seattle

Three levers move the ratio, and the order matters.

1. Pay off, or pay down, the right debt. Fannie Mae's guide says a revolving balance paid off at or before closing does not count, and the card does not have to be closed. An installment loan paid down to ten or fewer payments generally drops out too. FHA is stricter: a closed-end debt only drops out on its own terms, and the handbook says you may not pay down a balance to meet the ten-month rule. Paying a debt off in full works under both, and the money used has to come from a documented source. The payment that is largest relative to its balance is usually the one to retire first.
2. Add a co-borrower. A second income on the application can move the ratio more than any payoff, as long as their debts are not heavier than their income. The co-borrower guide covers who can join.
3. Change the house payment. A larger down payment lowers principal and interest, and on a conventional loan it can reduce or remove mortgage insurance. A home with lower association dues or a lower price does the same. My how to get a mortgage guide walks through how the program and down payment interact.

One thing not to do: open new credit between pre-approval and closing. Fannie Mae requires the loan to be re-underwritten when new debt raises the ratio beyond its tolerances, and a recalculated ratio above 50 percent on a Desktop Underwriter file makes the loan ineligible. FHA requires the file to be rescored when undisclosed debts add more than $100 a month. A new car or a furniture account in escrow can undo an approval. My pre-approval guide covers what else to hold steady.

FAQ: Debt-to-Income Ratio for a Seattle Mortgage