Debt-to-Income (DTI) Ratio Calculator
Calculate your DTI to see if you qualify for a mortgage or loan.
1. Monthly Income (Before Tax)
2. Monthly Debt Payments
Total Monthly Income:
$0.00
Total Monthly Debt:
$0.00
Your DTI Ratio:
0.00%
Understanding Your Debt-to-Income (DTI) Ratio
Your Debt-to-Income (DTI) ratio is one of the most critical metrics lenders use to assess your ability to manage monthly payments and repay debts. Unlike your credit score, which measures your credit history, DTI measures your monthly cash flow efficiency.
How is DTI Calculated?
The formula for DTI is relatively simple. It is your total monthly recurring debt payments divided by your gross monthly income (income before taxes and deductions).
Formula: (Total Monthly Debt / Gross Monthly Income) x 100 = DTI %
For example, if you earn $6,000 a month and pay $2,000 in rent, loans, and credit cards, your DTI is 33%.
What is a Good DTI Ratio?
While lender requirements vary by loan type (Conventional, FHA, VA), general guidelines are as follows:
- 35% or less: Excellent. You have manageable debt and likely qualify for the best interest rates.
- 36% to 43%: Manageable. You will likely qualify for a mortgage, but lenders may ask for additional documentation. 43% is often the strict cutoff for Qualified Mortgages.
- 44% to 49%: High Risk. You may struggle to find a lender, or you may be limited to FHA loans which generally allow for higher ratios.
- 50% or higher: Critical. With half your income going to debt, you have limited financial flexibility. Most lenders will decline a mortgage application at this level.
Front-End vs. Back-End DTI
Lenders actually look at two types of ratios:
- Front-End Ratio: Only counts your housing costs (mortgage principal, interest, taxes, insurance, and HOA). Lenders prefer this to be under 28%.
- Back-End Ratio: Counts housing costs plus all other recurring debt (cars, student loans, credit cards). This is the number calculated above, and lenders prefer this under 36% (though 43% is common).
How to Lower Your DTI
If your ratio is too high, you have two levers to pull: increase income or decrease debt. The fastest way to improve your ratio for a loan application is usually to pay off debts with high monthly payments but low total balances, such as credit cards or small personal loans.