Debt-to-Income Calculator

How to Use This DTI Calculator

1. Enter your gross monthly income (before taxes and deductions) from your primary job.

2. Add any additional income sources such as side jobs, rental income, dividends, or alimony.

3. Enter all your monthly debt payments including mortgage/rent, car loans, credit cards, student loans, and other obligations.

4. Click "Calculate DTI Ratio" to see your debt-to-income percentage and financial health rating.

What is Debt-to-Income Ratio?

Debt-to-income (DTI) ratio is a personal finance measure that compares your total monthly debt payments to your gross monthly income, expressed as a percentage. Lenders use this ratio to assess your ability to manage monthly payments and take on additional debt responsibly.

A lower DTI indicates that you have a healthy balance between debt and income, while a higher DTI suggests that too much of your income goes toward debt payments. This metric is one of the most important factors lenders consider when evaluating loan applications, particularly for mortgages.

DTI Ratio Ranges and What They Mean

• 36% or less: Excellent - You have a healthy debt level with room for additional borrowing if needed
• 37% - 43%: Acceptable - Most lenders will approve you, but you should focus on reducing debt
• 44% - 50%: High - You may face higher interest rates or require additional documentation for loan approval
• Above 50%: Very High - Most conventional lenders will decline applications; focus on debt reduction

Front-End vs Back-End DTI

Lenders often look at two types of DTI ratios:

• Front-End DTI (Housing Ratio): Only includes housing costs (mortgage/rent, property taxes, insurance, HOA). Lenders prefer this under 28%.
• Back-End DTI (Total DTI): Includes all monthly debt obligations. This calculator measures back-end DTI. Lenders prefer this under 36-43%.

For mortgage qualification, lenders typically use the 28/36 rule as a guideline - housing costs should be under 28% and total debt under 36% of gross income.

What Debts Are Included in DTI?

Your DTI calculation should include all recurring monthly debt obligations:

• Included: Mortgage/rent, car payments, student loans, credit card minimum payments, personal loans, child support, alimony
• Not included: Utilities, groceries, insurance (unless part of mortgage), cell phone bills, subscriptions, or other living expenses

Lenders look at the minimum required payments, not what you actually pay. If your credit card minimum is $50 but you pay $200, lenders use $50 for DTI calculations.

How to Improve Your DTI Ratio

• Pay down debt: Focus on reducing high-balance debts to lower your monthly obligations
• Increase income: A raise, side job, or rental income improves your ratio
• Avoid new debt: Do not take on new loans or credit cards before applying for a mortgage
• Refinance: Lower interest rates can reduce monthly payments on existing debt
• Pay off small debts: Eliminating a car payment or credit card removes it from your DTI entirely

DTI Formula

The DTI formula is: DTI = (Total Monthly Debt Payments / Gross Monthly Income) x 100

For example, if your monthly debts total $2,000 and your gross monthly income is $6,000, your DTI is 33% ($2,000 / $6,000 x 100).

For mortgage qualification, conventional loans typically require a DTI of 43% or lower. FHA loans may allow up to 50% with compensating factors like strong credit or significant savings.