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Debt-to-Income Ratio Calculator

The debt-to-income (DTI) ratio, calculated as (Total Monthly Debt Payments / Gross Monthly Income) x 100, is a key metric lenders use to evaluate borrowing capacity. A lower DTI generally indicates a stronger financial position. Enter your total monthly debt payments and gross monthly income below to see your estimated DTI ratio and a general rating based on common lending guidelines.

Quick Answer

With $1,500 in monthly debt payments and $5,000 in gross monthly income, the estimated DTI ratio is 30%, which falls in the 'Good' range (under 36%).

Include mortgage/rent, car loans, student loans, credit card minimums, and other recurring debt payments.

Your total monthly income before taxes and deductions.

Common Examples

Input Result
$1,500 debt, $5,000 income Estimated 30% DTI (Good)
$2,000 debt, $5,000 income Estimated 40% DTI (Acceptable)
$900 debt, $4,000 income Estimated 22.5% DTI (Good)
$3,000 debt, $5,500 income Estimated 54.5% DTI (High)

How It Works

This calculator uses the standard debt-to-income ratio formula:

DTI = (Total Monthly Debt Payments / Gross Monthly Income) x 100

Where:

  • Total Monthly Debt Payments = the sum of all recurring monthly debt obligations (mortgage or rent, car loans, student loans, credit card minimum payments, personal loans, child support, and other fixed debt payments)
  • Gross Monthly Income = total monthly income before taxes and other deductions (salary, wages, bonuses, freelance income, rental income, etc.)

DTI Rating Guidelines

Lenders commonly use these approximate thresholds when evaluating borrowers:

  • Under 36%: Generally considered good. Most lenders view this favorably.
  • 36% to 43%: Generally considered acceptable. Some lenders may still approve borrowers in this range, particularly for conforming mortgages.
  • 43% to 50%: Caution range. Borrowers may face limited lending options or higher rates. 43% is the maximum DTI for most qualified mortgages under federal guidelines.
  • Over 50%: Generally considered high. Most conventional lenders will not approve new credit at this level.

These are general industry guidelines and vary by lender, loan type, and other financial factors. The DTI ratio alone does not determine creditworthiness.

Two Types of DTI

Lenders may look at two versions of DTI:

  • Front-end DTI includes only housing costs (mortgage, rent, property tax, insurance).
  • Back-end DTI (what this calculator estimates) includes all monthly debt obligations.

Worked Example

A borrower has the following monthly payments: mortgage $1,200, car loan $350, student loan $200, credit card minimums $150. Total monthly debt = $1,900. Gross monthly income = $5,500. DTI = $1,900 / $5,500 x 100 = 34.5%. This falls in the “Good” range (under 36%), indicating a manageable debt load based on this metric.

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Frequently Asked Questions

What counts as monthly debt for DTI?
Monthly debt includes mortgage or rent payments, car loan payments, student loan payments, credit card minimum payments, personal loan payments, child support, alimony, and any other recurring debt obligations. It does not typically include utilities, insurance premiums, groceries, or other living expenses unless they are debt-related.
What is the difference between gross and net income for DTI?
DTI uses gross income, which is your total income before taxes and deductions. Net income (take-home pay) is what remains after taxes, retirement contributions, and other withholdings. Since DTI uses gross income, the actual portion of your take-home pay going to debt is higher than the DTI percentage suggests.
What DTI ratio do I need for a mortgage?
Most conventional mortgage lenders prefer a back-end DTI of 43% or lower. FHA loans may allow DTI ratios up to 50% in some cases with compensating factors. VA loans do not have a strict DTI cap but generally prefer 41% or below. These are general guidelines that vary by lender and loan program.
Does DTI affect my credit score?
DTI itself is not a factor in credit score calculations. Credit scores are based on payment history, credit utilization, length of credit history, credit mix, and new credit inquiries. However, lenders evaluate both your credit score and DTI when making lending decisions.
How can I lower my DTI ratio?
There are two approaches: reducing monthly debt payments or increasing gross monthly income. Paying off loans, refinancing at lower rates, or consolidating debt can reduce the numerator. A raise, second income source, or side business can increase the denominator. Both approaches lower the resulting ratio.