Debt-to-Income Ratio Calculator
Enter your total monthly debt payments and gross monthly income to calculate your DTI ratio — the number lenders use to evaluate loan applications.
What Is Debt-to-Income Ratio?
Debt-to-income ratio (DTI) is a personal finance metric that compares your total monthly debt payments to your gross (pre-tax) monthly income. Lenders use it as a primary indicator of financial health and your ability to take on and repay new debt.
The formula is simple:
DTI Ratio = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100
For example, if your monthly debts total $1,800 and your gross monthly income is $6,000: DTI = ($1,800 ÷ $6,000) × 100 = 30%.
DTI Thresholds and What They Mean
Different DTI ranges carry different implications for loan approval and financial health:
| DTI Range | Category | Mortgage Impact |
|---|---|---|
| Below 20% | Excellent | Best rates; strong approval likelihood |
| 20% – 35% | Good | Solid position; good rates available |
| 36% – 42% | Acceptable | Approvable but may face higher rates |
| 43% – 49% | Poor | Risky; many lenders will decline conventional loans |
| 50%+ | Distressed | Very difficult to qualify; financial stress likely |
How Lenders Use DTI
When you apply for a mortgage, auto loan, or personal loan, lenders calculate two DTI figures:
- Front-end DTI (housing ratio): Only housing costs (mortgage principal, interest, taxes, insurance) divided by gross income. Most lenders prefer this below 28%.
- Back-end DTI (total debt ratio): All monthly debt payments (housing + all other debts) divided by gross income. This is what this calculator computes. Most lenders require this below 43% for conventional loans.
For example, if you earn $7,000/month and want to buy a home with a $1,800/month mortgage payment while also carrying $400/month in car and student loan payments: back-end DTI = ($1,800 + $400) ÷ $7,000 = 31.4% — well within the acceptable range.
Understanding your DTI before applying for a mortgage gives you time to pay down debts and improve your ratio, potentially saving thousands of dollars in interest over the life of the loan.
Debt-to-Income FAQs
What is a good debt-to-income ratio?
Most lenders consider a DTI ratio below 36% to be good, with the ideal being below 20%. For conventional mortgage approval, most lenders require a DTI of 43% or lower. FHA loans may allow up to 50% with compensating factors. The lower your DTI, the better your chances of loan approval and favorable interest rates.
What debts are included in DTI?
DTI includes all recurring monthly debt obligations: mortgage or rent payment, car loan payments, student loan payments, minimum credit card payments, personal loan payments, child support or alimony, and any other installment loan payments. It does not include utilities, groceries, insurance premiums, or taxes (unless those are part of a mortgage payment).
Does DTI affect mortgage approval?
Yes — DTI is one of the most important factors lenders evaluate when approving a mortgage. Most conventional lenders require a back-end DTI (all debts including the proposed mortgage) of 43% or less. Lenders with a DTI above 36% may face higher interest rates or need to make a larger down payment.
How can I lower my debt-to-income ratio?
You can lower your DTI by paying down existing debts (especially high-minimum credit cards), avoiding taking on new debt before a major loan application, increasing your income through a raise, second job, or side income, and refinancing existing loans to lower monthly payments. Even small improvements in DTI can meaningfully improve loan terms.