Debt-to-Income (DTI) Ratio Calculator
Determine your borrowing eligibility by calculating your monthly debt relative to your income.
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Total Monthly Debt:
$0.00
Your DTI Ratio:
0.00%
What is a Debt-to-Income (DTI) Ratio?
Your Debt-to-Income (DTI) ratio is a personal finance measure that compares the amount of debt you have to your overall income. Lenders, including mortgage lenders and credit card issuers, use this ratio to measure your ability to manage the monthly payments and repay the money you plan to borrow.
Simply put, it answers the question: "How much of your gross monthly income goes towards paying off debt?"
How the Calculator Works
The formula used in this calculator is straightforward:
DTI = (Total Monthly Debt Payments / Gross Monthly Income) × 100
For example, if your gross monthly income is $6,000 and you have the following debts:
- Mortgage/Rent: $1,800
- Car Loan: $400
- Student Loans: $300
- Credit Cards: $100
Your total monthly debt is $2,600. Your DTI calculation would be: ($2,600 / $6,000) × 100 = 43.33%.
Interpreting Your DTI Score
Different lenders have different standards, but generally, the ratios fall into these categories:
- 35% or less: Considered excellent. You have a manageable level of debt relative to your income.
- 36% to 43%: This is often the upper limit for many mortgage lenders. You may still qualify for loans, but terms might be stricter.
- 44% to 49%: Considered high risk. You may struggle to get approved for a mortgage or may face higher interest rates.
- 50% or higher: Indicates financial distress. Lenders may view you as unable to handle additional debt obligations.
The "Back-End" vs. "Front-End" Ratio
This calculator focuses on the Back-End Ratio, which includes all your monthly debt obligations. Lenders also look at the Front-End Ratio, which typically only includes your housing costs (mortgage principal, interest, taxes, and insurance). Ideally, your front-end ratio should be below 28%.