Everything You Need to Know About How Debt-to-Income Ratio Works

Your Debt-to-Income Ratio is a critical number that you should always be able to estimate, not only in advance of a loan application where it will be used, but to give you insight into your risk of having too much debt or being in danger of defaulting on future credit lines and loans.

What is a Debt-to-Income Ratio?

Your debt-to-income ratio (DTI) quickly demonstrates how much debt you have when compared to your income. It is a quick and relatively easy formula to determine if you have too much debt (“over-leveraged”) or can likely afford another loan. To calculate your debt-to-income ratio, divide your monthly gross income by your monthly minimum debt payments.

The most basic DTI formula looks like this:

Understanding Your Debt-to-Income Ratio and Its Importance in Your Finances

When you apply for a home loan, car loan, or consumer loan, the lender will almost certainly include among his or her calculations your Debt-to-Income Ratio, or DTI, in one form or another. Since lenders are most interested in lending to borrowers who they have confidence will repay the loan as agreed, lenders want to avoid approving a loan that will overburden the borrower. The DTI is a powerful and proven tool in this process.

Deciding upon a borrower’s “creditworthiness” is a matter of predicting future behavior. Since recent past behavior is the best predictor of future behavior, lenders will look at your current and recent debt and income behaviors in order to predict how you will repay your future obligations to them. Even if you completely expect to get a raise, start a side job, or receive a cash gift, lenders are not interested since these are all still just possibilities. They want cold, hard facts. When money counts, decisions are made on current realities.

The debt-to-income ratio is so widely used among lenders because it is a relatively easy formula to calculate and gives a reliable picture of the consumer’s current state of financial affairs, particularly with regard to debt. The most basic reality lenders want to discover is whether the potential borrower can both afford to repay any new loan while also demonstrating the discipline to do so.

The DTI addresses just the first of these two realities. If the consumer carries debt equal to or greater than 35% or 40% of his or her income, the reality in most cases is that he or she will struggle to repay those debts while also needing to purchase groceries, pay utilities, afford insurance, maintain transportation, and secure the other necessities and priority wants of life.

The consumer’s credit rating, or credit score, predicts the consumer’s second reality: that of demonstrating the required discipline to pay as agreed, regardless of ability. Consequently, the consumer’s DTI and credit rating form the basis of a large percentage of loan application decisions each year. In fact, many loan officers often give preliminary, unofficial verbal denials of loans to borrowers as soon as they see a DTI that surpasses acceptable levels.

Debt-to-Income Ratio Calculator


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How Many Debt-to-Income Ratios Are There?

There are two basic DTI ratios, the “Front-end” ratio, and the “Back-end” ratio. Each is used for different purposes by different professionals.

Front-end Debt-to-Income Ratio

The front-end DTI ratio has two versions of its own as well: your current front-end DTI and your projected front-end DTI. Both front-end DTI ratios focus only on your monthly housing costs. These housing expenses include your monthly mortgage or rent payments, your homeowner’s insurance monthly premium, your property taxes (annual taxes ÷ 12), your monthly private mortgage insurance (if you have it), and any monthly homeowner’s association dues (or annual dues divided by 12) you might have.

Your projected front-end debt-to-income ratio, on the other hand, includes the estimated mortgage payment, any homeowner’s insurance monthly premium you might be required to pay, your estimated monthly property taxes, and any corresponding monthly homeowner’s association dues.

The current front-end DTI is mostly for educational and informational purposes. You should regularly consider your current front-end DTI to determine if too much of your income is going toward servicing your housing-related debts. Anything in the 30% range is high, though not unmanageable. The lower your current front-end DTI, the better.

If your current front-end DTI is in the 40% or higher range, you are likely headed for some significant financial difficulties and should immediately consider a plan to reduce your debt balances.

Back-end Debt-to-Income Ratio

The back-end DTI starts with the same expenses and debt included in the front-end DTI and adds all other debts. The Back-end DTI ratio gives a much more complete and well-rounded picture of the consumer’s debt obligations compared to his or her income. Besides home-related expenses, the back-end DTI also includes the consumer’s following monthly payments:

  • Car or Truck Loan Payments
  • Credit Card Minimum Payments (Typically 3% to 5% of Your Current Balance)
  • Home Equity Payments
  • IRS Income Tax Account Approved Repayment Plan (Delinquent Tax Debt)
  • Payment Due for Over-Drafted Account
  • Personal or Signature Loan Payments
  • Personally-Guaranteed Business Loan Payments
  • Retail Account Payments (e.g. Computer, Appliance or Furniture)
  • Store Card Payments (Calculated Similarly to Credit Cards)
  • Student Loan Payments (Current or Upcoming if Exiting Deferral within a Year)
  • Child Support Payments
  • Alimony Payments
  • Monthly Payment Arrangements for Collection Accounts
  • Any Other Monthly Debt Obligations* (Whether Found on the Consumer’s Credit Report or Not)

*For example, while debt to a doctor’s office or a loan from a family member will not be on your credit report, your calculated DTI will be inaccurate if you do not include these monthly payments among your debts. While many consumers do not want to disclose unreported debts, the reality is that if you withhold the information, you are giving an inaccurate version of your debt-to-income ratio, likely leading to troubles for both you and the lender.

What Monthly Obligations Are Not Included in Your Debt-to-Income Ratio?

There are several monthly obligations included in the debt portion of your DTI that are not technically debts. These include homeowner’s insurance, private mortgage insurance premiums, homeowner’s association dues, child support payments, and alimony payments.

This begs the question as to whether all monthly obligations are included in the debt-to-income ratio. The simple answer is no. Contractual, non-debt obligations are generally not included in your DTI, such as:

  • Car/Truck Insurance Premium
  • Cell Phone or Home Phone Bill
  • Childcare Costs
  • Electricity Bill
  • Gym Membership Fee
  • Health Insurance Premium
  • Heating Bill
  • House Cleaning Contract Payment
  • Internet, Cable/Satellite TV Bill
  • Landscaper Contract Fee
  • Life Insurance Premium
  • Music Subscription
  • Premium TV or Movie Channel Subscription (e.g. Netflix, Hulu)
  • Storage Unit Payment
  • Income Tax
  • Water-Sewer-Trash Bill

The thinking here is that these services and products will be paid by the borrower using the rest of the borrower’s income not being used to service the debt in his or her debt-to-income ratio.

What Income Is Included in Your Debt-to-Income Ratio?

The second portion of the DTI involves your income. Lenders want to see solid, reliable, regular income if they are going to use it to predict whether you can afford your future monthly payments on a new loan. Consequently, the most common forms of monthly income included in your DTI are:

  • Alimony Received
  • Child Support Received
  • Gross Income (whether hourly wages or monthly salaries)
  • Lottery Winnings Annuities (paid annually and averaged monthly)
  • Pension Income
  • Rental Property Income if in Your Name
  • Second Job or Side Gig Income
  • Self-Employment Income
  • Social Security Disability Insurance
  • Social Security Retirement Income
  • Social Security Survivor Benefits
  • Supplemental Security Income (SSI through Social Security Administration)
  • Tips and Bonuses

Lenders are looking for income that the borrower can count on receiving throughout the life of the debt repayment term.

What Income Is Not Included in Your Debt-to-Income Ratio?

Lenders generally disregard temporary, sporadic, unreliable, or unpredictable income. Since they are lending real money, lenders want to use real (i.e. reliably regular) income as the basis of their decisions. Consequently, most lenders will exclude the following sources of income when calculating a potential borrower’s debt-to-income ratio:

  • Babysitting, Lawn-mowing, or Other Informal Income
  • Business Gross Income
  • Cash Gifts from Family, Friends, or Others
  • Loan Payment from Family or Friends
  • One-time gambling winnings (slot, table, etc.)
  • Parent’s or Sibling’s Income
  • Spouse’s Income (unless Applying for a Joint Account)
  • Tax Refund whether local, state, or federal
  • Value of Investment Account

If you wonder about a certain income being counted in your debt-to-income ratio, ask whether the IRS is aware of the income. Then, is the income in your own name? Is it income you receive regularly, usually in the same amount each month? If you can answer “yes” to each question, then it might be counted. That said, answering no does not necessarily exclude the income from being included in your DTI.

What to Do if Your Debt-to-Income Ratio Is Too High

Whether you figure out your debt-to-income ratio using our DTI calculator, or you have been told by a potential lender that your DTI is too high for consideration of a loan, you might consider the following ideas for improving your financial situation. You should look at these ideas whether you plan to re-apply for the potential loan or not.

Time to Plan and Control Your Spending

First, while your high debt-to-income ratio is likely a result of various choices and events, it is definitely telling you to plan your spending and minimize overspending and overborrowing. Except in cases of extensive medical debts from unpreventable accidents or health conditions, most cases of overwhelming debts can at least be minimized if not prevented by developing a few basic financial habits. These include the centrally important habit of paying yourself first every time. By placing some amount of every paycheck, every gift, and every income source into an emergency savings fund, you will be in a better financial place to address even such difficult situations as temporary periods of unemployment, severe medical issues, being widowed, or even going through a divorce. With your habit of savings set, your spending plan becomes a simple process of matching your income to your monthly needs and wants.

Set up auto-payments to your debts, identity how much you will need for groceries, gasoline, utilities, cell phone, etc., and you have the framework of a functional and helpful budget.

Demonstrate and Put into Practice a High Level of Productive Patience

Next, be patient. If you figured out your own DTI and noticed it is above the lender’s acceptable levels, now may not be the time to apply for the loan you are seeking. Although applying for a loan that is rejected will not have any effect on your debt-to-income ratio, it might have a small negative effect on your credit rating. In addition to your DTI, your credit rating is a major deciding factor your potential lender will consider.

Your patience can include a laser focus on addressing issues within your personal and household finances that might be contributing to your high DTI. Plan your spending, put large purchases such as a new car or new appliance on hold or at least on a plan to save up and purchase without additional debt, and look for ways to improve your DTI.

Debt-to-Income Ratio Explained

When it comes to improving your DTI, you have three options and only three options to consider:

  1. Increase your income
  2. Lower your debts and financial obligations
  3. Do a combination of #1 and #2

Increasing Your Income

By increasing your income, you increase the denominator of the DTI formula, making the ratio smaller. The more you increase your income, the faster your ratio will fall.

When considering how to increase your income, keep in mind the two lists above deal with incomes that are included in the DTI and incomes that aren’t included. Focus on incomes that are included.

We will never recommend you play the lottery, so please disregard that entry. However, can you work a side gig for a month or two or three to establish a pattern of increased income? Whether you are delivering food, freelancing as a writer, or taking yard sale deals you find retailing them on Amazon, a side gig with the most likely and commonsense way to build your income. You might even turn babysitting into a regular gig by looking into daycare options in your home. Side gigs, though, come with obvious and not-so-obvious drawbacks. They demand a significant amount of time to work, often 4-6 hours a day after a shift at your first job each day.

Some, like food deliveries and ride-sharing, take additional tolls on your vehicle by putting extra mileage and requiring additional gasoline expenses. Take such extra costs into account when looking to increase your income. However, steer clear of the rationalization to avoid jobs that make minimal income below what your time is worth financially.

Your time is not reimbursable outside hourly or salaried positions, so any extra income earned is above and beyond your current income. That said, your time is valuable in other ways, however, you choose to spend it.

Of course, you can always ask for a raise, recommend a bonus tied to your work and even investigate automating child support or alimony to increase its likelihood of arriving on time and in full each month.

Lowering Your Debts and Financial Obligations

To accelerate your debt repayment and consequently lower your DTI ratio, there are only four effective options to consider:

  1. Repay the debts on your own using one of the four methods we describe in our DIY section.
  2. Work directly with your creditors to lower your interest rates. This is most commonly effective with credit card and store card accounts. If you have a credit card with a 29% interest rate and yet you have made payments on time for the past year or more, call the card’s customer service department and explain how you are less of a risk now than you were a year or two ago, having proved so by making on-time payments for a year. If they refuse to lower your rate, let them know you will be transferring your balance to a different card company, although you would prefer not to. In most cases, credit card companies would rather lose out on a small portion of the interest you pay by lowering your rate than the entire amount of the interest you would pay by having it paid off by a balance transfer.Once you secure a lower interest rate, continue to make your current monthly payments, even if the credit card company asks for less each month. Sending even $50 extra a month to a $5,000 credit card balance can accelerate your payoff from 15 years down to 3 years or less.
  3. Work with a Credit Counseling agency (CRA) like Money Fit. The CRA works with your current creditors to lower your interest rates, and waive late or over-limit fees, typically leading to lower monthly payments and a debt freedom day just five years or less in the future. There are no prepayment penalties, and there is no reason you can’t send extra payments through the CRA to accelerate your repayment plan even more.
  4. Negotiating the principal balances on your accounts may seem like a godsend, but beware of the dangers it will pose. Not only are debt negotiation companies (aka debt settlement companies) successful in less than 15% of cases, the methods they follow usually lead to even greater damage to your credit rating. This will likely prohibit you from qualifying for your next loan.
  5. Bankruptcy exists for a reason: to protect your assets from creditors when you are unable to pay your obligations. If bankruptcy is your best option, then qualifying for a loan had better be your lowest priority. A bankruptcy on your credit report is the single most damaging line item to your credit score, lowering it by as much as 35%. However, bankruptcy is an effective way to get rid of your debt obligations. Just don’t expect potential lenders to look favorably upon your finances if they see a bankruptcy on your record from the past seven to ten years.

Focusing on your debt-to-income ratio is only one of your priorities when applying for a loan. Consider the following questions before even heading to the bank or credit union or applying online.

Can You Afford Another Monthly Payment?

You will need to have a spending plan in place, knowing what your monthly income and expenses are before you can determine the size of any monthly payment you can afford. With all your other monthly living expenses, debt payments, and other obligations, what effect will a new monthly debt payment have on your finances?

  • Will you be unable to save anything at all? If so, you probably should not get the loan.
  • Will you be less like to afford your rent or mortgage? You should probably avoid the loan application
  • Will you have a hard time paying for your other financial priorities? You should probably reconsider talking to a lender.

Between 60% and 80% of households are already living paycheck-to-paycheck. Adding another monthly payment to your monthly expenses may be the breaking point leading to payment defaults on your other loans and accounts.

Can You Afford a Down Payment?

It is a common complaint heard from potential borrowers denied a low because they did not have a large enough down payment (e.g. on a car or home)? “If I could afford the down payment, would I be asking you for a loan?”

The reality, though, is borrowers who put a little of their own “skin in the game,” so to speak, are much more motivated to repay their debts and pay as agreed. Whether it’s 10% or 25%, any amount of down payment for the purchase of a home, car, truck, boat, or RV will increase your chances of approval.

What is on your credit report?

When was the last time you looked at your credit report? If it has been more than a few months, head on over to the federally-mandated site at AnnualCreditReport.com to pull one, two, or all three of your credit reports. You won’t find your credit rating (aka score) there, but you will see all the lines of credit and loans you have had in the past seven to ten years.

The Consumer Reporting Agencies (CRAs) generally group “potentially negative accounts” together so you can see what might be hurting your credit. Often, it will be a missed or late payment, especially if it occurred in the past one to two years.

For others, the negative effect on your credit rating comes from high account balances on your credit cards, store and retail accounts, and car and home loans. Pay those down as much and as quickly as possible.

Besides lowering your DTI, work on improving your credit score by cleaning up your credit report. If there are errors or inaccuracies in your report, go directly to the home pages of Equifax.com, Experian.com, and TransUnion.com to dispute them. It may take 30 days, but in the end, removing inaccurate items will generally build your credit rating in the eyes of potential lenders.

What is your credit rating?

Your credit rating is based upon your history of monthly payments (on-time and as agreed is best while late or missing payments hurt significantly), your low balances when compared to your credit limits (your debt-to-limit ratio, often confused with your DTI), and how long you have had credit, among other factors. It attempts to predict your future loan payment behavior based on your recent loan payment history.

The higher your credit score, in many cases, the higher DTI a lender will consider acceptable.

Common Debt-to-Income Ratio Related Questions

What are the guidelines on acceptable debt-to-income ratios used by Federal Housing Authority (FHA)?

While the Department of Housing and Urban Development (HUD) is the highest government body responsible for a healthy and growing housing market in the US, the FHA insures loans by approved lenders and sets minimum standards for such loans. Although its guidelines indicate a cap of 43% to 50% DTIs on loans it ensures, FHA insured more than half of its loans in 2018 and 2019 for borrowers with DTIs greater than 50%.

What debt-to-income ratio range does a car loan lender look for?

Automobile lenders want to see your projected DTI at 36% or less. Some lenders may go as high as 40%but above 40%, you will have a hard time finding a lender. To combat a high DTI, consider putting more money down or paying down or off a small loan.

Does my DTI matter after getting approved for a mortgage?

If you have been approved for a home loan, you will want to avoid anything that might negatively affect your DTI before the loan closes at the title company. Otherwise, the approval can be withdrawn, leaving you without a home to move into.

About the Author

Client Credit Report Authorization

You hereby authorize and instruct Debt Reduction Services, Inc. (DRS, dba Money Fit by DRS) and/or its assigned agents to:
  • Obtain and review your credit report, and
  • Request verifications of your income and rental history, and any other information deemed necessary for improving your housing situation (for example, verifying your annual property tax obligations and homeowner’s insurance fees)
Your credit report will be obtained from a credit reporting agency chosen by DRS. You understand and agree that DRS intends to use the credit report evaluate your financial readiness to purchase or rent a home and/or to engage in post-purchase counseling activities and not to grant credit. You understand you may ask any questions pertaining to your credit report. However, while DRS will review the information with you, the company is not able to furnish you with a copy of your credit profile. You hereby authorize DRS to share your information from your credit report and any information that you provided (including any computations and assessments produced) with the entities listed below to help DRS determine your viable financial options.
  • Banks
  • Counseling Agencies
  • Debt Collectors
  • Landlords
  • Lenders
  • Mortgage Servicers
  • Property Management Companies
  • Public Housing Authorities
  • Social Service Agencies
Entities such as mortgage lenders and/or counseling agencies may contact your DRS counselor to evaluate the options for which you may be eligible. In connection with such evaluation, you authorize the credit reporting and/or financial agencies to release information and cooperate with your DRS counselor. No information will be discussed about you with entities not directly involved in your efforts to improve your housing situation. You hereby authorize the release of your information to program monitoring organizations of DRS, including but not limited to, Federal, State, and nonprofit partners for program review, monitoring, auditing, research, and/or oversight purposes. In addition, you authorize DRS to have your credit report pulled two additional times to conduct program evaluations. You also agree to keep DRS informed of any changes in address, telephone number, job status, marital status, or other conditions which may affect your eligibility for a program you have applied for or a counseling service that you are seeking. Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Client Privacy, Data Security, and Client Rights Policy

NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

Debt Reduction Services, Inc. (DRS) has put into place policies and procedures to protect the security and confidentiality of your nonpublic personal information. This notice explains our online information practices and how we use and maintain your information to conduct our financial education and credit counseling sessions and to fulfill information and question requests. This privacy policy complies with federal laws and regulations.

To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

We use non-identifying and aggregate information to better design our website and services, but we do not disclose anything that could be used to identify you as an individual.

You hereby authorize DRS, when necessary, to share your nonpublic personal, financial, credit, and any information that you provided (including any computations and assessments produced) with the following entities in order to help DRS provide you with appropriate counseling or guide you to appropriate services: third parties such as government agencies, your lender(s), your creditor(s), and nonprofit housing-related and other financial agencies as permitted by law, including the U.S. Department of Housing and Urban Development.

To prevent unauthorized access, maintain data accuracy, and ensure the correct use of information, we have put in place appropriate physical, electronic, and managerial procedures to safeguard and secure the information we collect online. We limit access to your nonpublic personal information to our employees, contractors and agents who need such access to provide products or services to you or for other legitimate business purposes.

Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

Please refer to DebtReductionServices.org for details of our services.

  1. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
  2. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
  3. Records: We maintain records of the services you receive, including notes about your progress or other relevant information to your work with us. You have the right to access and view your records by making a request to your counselor.
  4. Confidentiality: We respect your privacy and offer our services in confidence with the understanding that we may share such information with auditors and government regulators. Certain laws or situations may also lead to disclosing confidential issues, such as those involving potential child abuse or neglect, threats to harm self or others, or court subpoenas.
  5. Refusal of Services: You have the right to refuse services without any penalty or loss.
  6. Disclosure of Policies and Practices: You will be provided our agency disclosure statement.
  7. Sharing of Information: Sometimes we will need to contact other agencies or we may need to share your information, including your records, with other agencies or with regulators. We will do this only if you sign this form that gives us permission except for limited reasons; please see # 5 above for examples of such situations.
  8. Other: You have the right to be treated with respect by our staff, and we expect the same from you in return. We encourage you to always ask questions if something is not clear. We also encouraged you to express your thoughts and advocate throughout our services.

You acknowledge that this authorization will remain in effect for the duration of time that DRS serves as your housing counselor or financial education provider. You also acknowledge that should you wish to terminate this authorization, you will notify DRS in writing.

Disclosure  Statement

NOTE: If you have an impairment, disability, language barrier, or otherwise require an alternative means of completing this form or accessing information about our counseling services, please communicate with your DRS representative about arranging alternative accommodations.

Program Disclosure Form

Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).