Your debt-to-income (DTI) ratio is one of the most important numbers lenders use to evaluate your creditworthiness. This calculator helps you understand your DTI and what it means for your ability to qualify for loans and mortgages.
How This Calculator Works
This calculator computes your DTI ratio:
- Gross Monthly Income: Total income before taxes
- Monthly Debt Payments: All recurring debt obligations
- Front-End DTI: Housing costs only (for mortgages)
- Back-End DTI: All debts combined
- Lender Thresholds: How your ratio compares to typical limits
The Formula Explained
DTI Ratio = (Total Monthly Debt Payments / Gross Monthly Income) × 100
Example: $2,000 in monthly debts on $6,000 gross income = 33% DTI
Lenders typically want DTI below 36-43% for loan approval.
Step-by-Step Example
Calculating Your DTI
| Monthly Income | Amount |
| Gross Salary | $7,500 |
| Monthly Debt Payments | Amount |
| Mortgage/Rent | $1,800 |
| Car Payment | $450 |
| Student Loans | $300 |
| Credit Card Minimums | $150 |
| Total Debts | $2,700 |
DTI = $2,700 / $7,500 = 36% (acceptable for most lenders)
Frequently Asked Questions
What is debt-to-income ratio?
DTI ratio measures what percentage of your gross income goes to debt payments. A 35% DTI means 35 cents of every dollar you earn (before taxes) goes to debt obligations. Lenders use this to assess if you can comfortably take on additional debt.
What's the difference between front-end and back-end DTI?
Front-end DTI (housing ratio): Housing costs only—mortgage, property tax, insurance, HOA. Typically should be under 28%. Back-end DTI (total ratio): All debts including housing, car loans, student loans, credit cards. Typically should be under 36-43%. Mortgage lenders evaluate both.
What is a good debt-to-income ratio?
Excellent: Under 20% (strong financial position). Good: 20-35% (comfortable for most lenders). Acceptable: 36-43% (may qualify with strong credit). High: 44-50% (difficult to get new credit). Concerning: Over 50% (financial stress likely). Lower is always better.
What DTI do I need for a mortgage?
Conventional mortgages: Usually want back-end DTI under 43%, front-end under 28%. FHA loans: May allow up to 50% with compensating factors. VA loans: Typically 41% guideline but flexible. Having a lower DTI improves approval odds and may get you better rates.
What debts are included in DTI?
Include: Mortgage/rent, car loans, student loans, credit card minimum payments, personal loans, child support, alimony, any recurring debt obligation. Don't include: Utilities, insurance (unless in mortgage payment), subscriptions, groceries, or other regular expenses that aren't debt.
How can I lower my DTI ratio?
Two approaches: (1) Reduce debt—pay off loans, pay down credit cards, avoid new debt. (2) Increase income—raise, promotion, side income, spouse's income. Before a major purchase like a home, focus on pushing DTI lower to improve qualification and rates.
Does DTI affect my credit score?
DTI itself isn't in your credit score—credit bureaus don't know your income. However, high debt relative to available credit (utilization) does affect scores. A high DTI often correlates with high utilization. Lenders check both DTI and credit score separately.
Can I qualify for a mortgage with high DTI?
Possibly—some lenders and programs allow higher DTI with compensating factors: excellent credit score, large down payment, significant cash reserves, stable employment history, or expected income increases. However, stretching to high DTI puts you at risk if circumstances change.
Key Points to Remember
- 36% or below is ideal: You have breathing room for financial surprises
- 43% is the typical limit: Many mortgages won't approve above this
- Use gross income: Before taxes, not take-home pay
- Include all debts: Don't forget minimum payments on all accounts
- Lower DTI = Better offers: Rates and terms improve with lower ratio