Debt-to-Income Ratio (DTI) Calculator
Find your DTI in seconds. Enter monthly debt payments and income to see your DTI category with tips to improve.
Enter your details above to see the results and understand what they mean for your financial planning.
Understanding Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is one of the most important metrics lenders use to evaluate your creditworthiness. It measures how much of your monthly income goes toward debt payments. The debt to income ratio calculation helps lenders assess your ability to manage additional debt.
How DTI is Calculated
DTI = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100
DTI Categories and What They Mean
- Excellent (0-20%): You have plenty of room for additional debt. Lenders will offer you the best rates and terms.
- Good (21-35%): You're in a healthy range. Most lenders will approve you for loans with competitive rates.
- Fair (36-43%): You're approaching the limit. Lenders may approve you but with higher rates or stricter terms.
- Poor (44-50%): You're at risk. Lenders may deny applications or require significant down payments.
- Very Poor (50%+): You're overextended. Focus on reducing debt before taking on more.
What Counts as Debt?
- Housing: Mortgage or rent payments
- Auto Loans: Car payments
- Credit Cards: Minimum monthly payments
- Student Loans: Monthly payments
- Personal Loans: Monthly payments
- Other Debts: Any monthly payment obligations
How to Improve Your DTI
- Increase Income: Ask for raises, take on side gigs, or find higher-paying jobs.
- Reduce Debt: Pay off high-interest debt first, consolidate loans, or negotiate lower rates.
- Delay New Debt: Avoid taking on new loans until your DTI improves.
- Budget Better: Track spending and cut unnecessary expenses to free up money for debt payments.
DTI Requirements by Loan Type
- Conventional Mortgages: Typically require DTI below 43%
- FHA Loans: Allow DTI up to 43% with compensating factors
- VA Loans: Generally require DTI below 41%
- Auto Loans: Usually require DTI below 45%
- Personal Loans: Often require DTI below 40%
What is a good DTI?
Generally, a debt-to-income ratio of 36% or lower is considered healthy and will help you qualify for the best loan terms. Many lenders prefer to see DTI below 43%, though some may approve loans with higher ratios depending on other factors like credit score and down payment.
Note: This information is for educational purposes only. Specific requirements vary by lender and loan type.
Monthly vs Annual
This calculator shows both monthly and annual debt-to-income ratios. Monthly DTI is what most lenders use for qualification, but annual DTI can help you see the bigger picture of your debt burden over time.
Use monthly figures for loan applications and annual figures for long-term financial planning and goal setting.
Make sense of your DTI
Debt‑to‑income (DTI) ratio measures how much of your gross monthly income goes to debt. Lenders use it to assess risk and set terms. This tool calculates total DTI and housing DTI so you can gauge where you stand and how much room you have for new loans.
Lower DTI improves approval odds and interest rates. To lower DTI, increase income, pay down revolving balances, or refinance to better terms. Track progress monthly and celebrate milestones as categories shrink.
FAQs
What's a good DTI?
Many lenders like to see total DTI under 36–41%, with housing DTI under ~28%. Lower is better.
Do lenders use net or gross income?
Most mortgage and consumer lenders use gross income for DTI calculations, not after‑tax income.
Do minimum credit card payments count?
Yes. Use the minimum required monthly payment amounts—not current balances—when estimating DTI.
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Understanding Debt-to-Income Ratio: Your Financial Health Barometer
What is Debt-to-Income Ratio (DTI)?
Debt-to-income ratio is a financial metric that compares your monthly debt payments to your gross monthly income. It's one of the most important factors lenders consider when evaluating your creditworthiness and ability to take on new debt.
How DTI is Calculated:
DTI = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100
Two Types of DTI:
- Front-End DTI: Housing costs only (mortgage/rent, taxes, insurance)
- Back-End DTI: All debt payments including housing
Why It Matters:
- Determines loan approval and interest rates
- Indicates overall financial health
- Helps identify debt management issues
- Guides financial planning decisions
DTI Ratio Categories and What They Mean
Excellent (0-28%):
You have excellent financial health with plenty of room for additional debt if needed. Lenders will offer you the best rates and terms.
Good (29-36%):
Strong financial position with manageable debt levels. You'll qualify for most loans with competitive rates.
Acceptable (37-43%):
Your debt levels are manageable but approaching the upper limit. You may face higher interest rates or stricter loan terms.
High Risk (44%+):
Your debt levels are concerning and may limit borrowing options. Focus on debt reduction before taking on new loans.
What Counts Toward Your DTI Calculation
Included in DTI:
- Housing Costs: Mortgage/rent, property taxes, homeowners insurance, HOA fees
- Auto Loans: Car payments, motorcycle loans, RV financing
- Credit Cards: Minimum monthly payments (not total balances)
- Student Loans: Federal and private student loan payments
- Personal Loans: Unsecured loans, medical debt payments
- Other Debts: Business loans, timeshare payments, alimony/child support
Not Included in DTI:
- Utility bills and insurance premiums
- Groceries and discretionary spending
- Investment contributions
- Entertainment and dining expenses
- Clothing and personal care costs
- Transportation costs (gas, maintenance)
Lender DTI Requirements by Loan Type
Conventional Mortgages:
- Front-End DTI: Maximum 28%
- Back-End DTI: Maximum 36% (43% with compensating factors)
- Compensating Factors: Excellent credit, large down payment, significant savings
FHA Loans:
- Front-End DTI: Maximum 31%
- Back-End DTI: Maximum 43% (up to 50% with compensating factors)
- Compensating Factors: Good credit, stable employment, minimal debt
VA Loans:
- Front-End DTI: Maximum 41%
- Back-End DTI: Maximum 41% (up to 60% with compensating factors)
- Compensating Factors: Military service, stable income, good credit
Auto Loans:
- Total DTI: Maximum 50% for most lenders
- Auto-Specific DTI: Maximum 15-20% of gross income
Real-World DTI Examples
Example 1: Excellent DTI
Monthly Income: $6,000
Housing: $1,200 (20%)
Car Payment: $300 (5%)
Student Loans: $200 (3.3%)
Total DTI: 28.3% - Excellent!
Example 2: Good DTI
Monthly Income: $5,000
Housing: $1,400 (28%)
Car Payment: $400 (8%)
Credit Cards: $150 (3%)
Total DTI: 39% - Good, but approaching limits
Example 3: High-Risk DTI
Monthly Income: $4,000
Housing: $1,600 (40%)
Car Payment: $500 (12.5%)
Credit Cards: $300 (7.5%)
Total DTI: 60% - High risk, focus on debt reduction
Strategies to Improve Your DTI Ratio
Increase Your Income:
- Ask for raises or promotions at work
- Develop new skills for higher-paying roles
- Start a side hustle or freelance work
- Invest in education or certifications
- Consider career changes to higher-paying industries
Reduce Your Debt:
- Pay off high-interest credit cards first
- Consider debt consolidation for lower rates
- Refinance high-rate loans when possible
- Use the debt snowball or avalanche method
- Negotiate with creditors for better terms
Optimize Your Budget:
- Track all expenses to identify waste
- Cut non-essential spending
- Negotiate bills and subscriptions
- Consider downsizing housing or transportation
- Build emergency fund to avoid new debt
Common DTI Calculation Mistakes
Using Net Income Instead of Gross:
Lenders use gross income (before taxes and deductions) for DTI calculations. Using net income will make your ratio appear higher than it actually is.
Including Non-Debt Expenses:
Only include actual debt payments, not regular living expenses like utilities, groceries, or insurance premiums.
Forgetting Irregular Debts:
Include all debt payments, even if they're quarterly or annual. Convert them to monthly equivalents.
Not Updating After Changes:
Recalculate your DTI after any significant changes in income, debt, or expenses to maintain accurate financial planning.
Ignoring Future Debt Obligations:
Consider upcoming debt payments when planning major purchases to ensure you maintain a healthy DTI ratio.
DTI and Financial Planning
Before Taking on New Debt:
Calculate how new debt will affect your DTI ratio. Ensure you stay within healthy ranges to maintain financial flexibility.
Home Buying Considerations:
Your housing DTI should ideally stay below 28% to leave room for other debt and maintain financial stability.
Emergency Fund Importance:
Having 3-6 months of expenses saved can help you avoid taking on new debt during emergencies, keeping your DTI ratio healthy.
Regular Financial Reviews:
Review your DTI ratio quarterly to track progress and identify areas for improvement in your financial health.
When to Use This Calculator
- Preparing for major loan applications
- Assessing your overall financial health
- Planning debt payoff strategies
- Evaluating if you can afford new debt
- Teaching financial literacy about debt management
- Planning major life changes (marriage, home purchase)
- Monitoring progress toward financial goals