Debt to Income (DTI) Calculator

Calculate your debt-to-income ratio (DTI) to understand how lenders view your ability to manage monthly payments and repay debts. This important financial metric helps determine your borrowing capacity and overall financial health.

What is Debt-to-Income Ratio?

Your debt-to-income ratio is the percentage of your monthly income that goes toward paying debts. It’s calculated by dividing your total monthly debt payments by your gross monthly income and multiplying by 100.

Formula

DTI Ratio = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100

Why Use This Calculator?

• Understand your financial health at a glance
• Determine if you qualify for a mortgage or other loans
• Identify if you need to reduce debt before taking on new loans
• Track your progress in reducing your debt burden
• Plan your financial future more effectively

Understanding Your Results

Your DTI ratio falls into one of these categories:

• Less than 36%: Healthy - You’re in good shape to take on new debt
• 36% to 43%: Manageable - You may still qualify for most loans
• 43% to 50%: Concerning - Consider reducing debt before borrowing more
• Above 50%: High Risk - Focus on debt reduction before new loans

What to Include in Calculations

Monthly Debt Payments

• Mortgage or rent payments
• Car loans
• Student loans
• Credit card minimum payments
• Personal loans
• Other regular debt payments

Monthly Income

• Gross salary (before taxes)
• Regular bonuses or commissions
• Investment income
• Rental income
• Other regular income sources

Tips for Improving Your DTI Ratio

1. Pay down existing debt
2. Avoid taking on new debt
3. Increase your income through side jobs or raises
4. Refinance existing loans for lower payments
5. Consider debt consolidation

Common Use Cases

• Mortgage qualification
• Personal loan applications
• Financial health assessment
• Debt management planning
• Credit improvement strategy

Frequently Asked Questions

Why is DTI important?

DTI is a key metric lenders use to evaluate loan applications. It helps them assess your ability to take on additional debt while managing existing obligations.

What’s a good DTI ratio?

Most lenders prefer a DTI ratio of 36% or less, though some may accept up to 43% for qualified borrowers. Government-backed mortgages might allow higher ratios.

Does DTI affect credit score?

DTI itself isn’t factored into your credit score, but high debt levels can impact your credit utilization ratio, which does affect your score.

Should I include utilities in debt payments?

Generally, no. Only include debts that appear on your credit report or are regular loan payments. Utilities, insurance, and similar bills are typically excluded.