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Formula 04 · Lender Risk AssessmentLast Updated: June 29, 2026

Texas Loan Qualification & Debt-to-Income Calculator

BLUF (Bottom Line Up Front): Lenders evaluate credit risk using debt-to-income (DTI) ratios. Conventional lending guidelines restrict monthly housing costs (PITI) to 28% of gross monthly income, and total combined monthly debt payments to 36%.

Live Interactive Calculator

Car loans, student loans, minimum credit card payments. Exclude utilities.
Conventional standard is 28% for housing costs.
Conventional standard is 36% for total obligations.
Maximum Qualifying Monthly PITI

$0.00

Calculating limitations...

Dual Ratio Assessment

Front-End (Housing) LimitOK

$0.00

Based strictly on 28% of gross monthly income for Principal, Interest, Taxes, and Insurance.

Back-End (Total Debt) LimitOK

$0.00

Based on 36% of income ($0) minus monthly debt of $0.

Core Principles

What does this calculate?

Calculators provide immediate verification, but licensing exams require you to reconstruct this arithmetic by hand on paper. Understanding the core financial boundaries, variables, and statutory margins of this formula is critical to securing your Texas licensing credentials.

The Official Formula
Front-End PITI = Gross Monthly Income × 28%
Back-End PITI = (Gross Monthly Income × 36%) - Monthly Recurring Debts
Max Qualifying PITI = The Lesser of the Front-End and Back-End Limits
The Student Trap

Students often include standard living expenses (like electric bills, water, grocery bills, or auto insurance) in the monthly recurring debt category. In exam questions, recurring debt ONLY refers to actual loan installment payments (car loans, student loans, credit card minimums) and court-ordered obligations (child support).

Texas Case Study

Worked Texas Exam Example

Active Case Study Walkthrough
A buyer in Houston has a gross monthly income of $10,000 and monthly car/student loan payments totaling $800. Under standard 28/36 conventional guidelines: 1. Front-end PITI Limit = $10,000 × 0.28 = $2,800. 2. Back-end PITI Limit = ($10,000 × 0.36) - $800 = $3,600 - $800 = $2,800. 3. Result: Both ratios align, setting the maximum qualifying monthly housing expense (PITI) at $2,800. If their debt was $1,000 instead, the back-end would limit them to $2,600 (lesser of $2,800 and $2,600).
Statutory Source Citation

Texas Finance Code §343

Lending and Borrowing Standards

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