Your Debt-to-Income (DTI) ratio is one of the most critical metrics lenders use to assess your creditworthiness. Unlike your credit score, which measures your history of paying debts, your DTI ratio measures your capacity to repay new debt based on your current income.
What is a DTI Ratio?
The DTI ratio represents the percentage of your gross monthly income that goes toward paying your monthly debt obligations. It is calculated by dividing your total recurring monthly debt by your gross monthly income.
36% or Less (Ideal): Most lenders view this as a healthy ratio. It indicates you have manageable debt and plenty of disposable income. This is often the sweet spot for the best mortgage interest rates.
37% to 43% (Manageable): You are likely still eligible for most loans, including Qualified Mortgages, but lenders may scrutinize your application more closely. You may be asked to pay off some smaller debts before closing.
44% to 49% (Risky): You may face difficulties getting approved for conventional loans. FHA lenders might still approve you if other factors (like credit score and cash reserves) are strong.
50% or Higher (Critical): At this level, you are considered high-risk. Most lenders will limit your borrowing options significantly. Focusing on aggressive debt repayment or income generation is recommended before applying for major loans.
Front-End vs. Back-End DTI
There are two types of ratios lenders look at:
Front-End Ratio: This only includes housing-related expenses (mortgage principal, interest, taxes, and insurance) divided by income. Lenders typically prefer this to be under 28%.
Back-End Ratio: This includes housing expenses plus all other consumer debts (credit cards, student loans, car payments). This calculator computes your Back-End Ratio, as it provides the most comprehensive view of your financial health.
How to Lower Your DTI Ratio
If your ratio is higher than 43%, consider these strategies to lower it:
Increase Income: Pick up a side hustle or negotiate a raise. Even a small increase in the denominator (income) can significantly lower the percentage.
Snowball Method: Focus on paying off debts with the highest monthly payments first, rather than just the highest interest rates, to free up cash flow quickly.
Avoid New Debt: Do not open new credit cards or finance large purchases like cars or furniture prior to applying for a mortgage.
function calculateDTI() {
// 1. Get Input Values
var incomeInput = document.getElementById("monthlyGrossIncome").value;
var rentInput = document.getElementById("rentPayment").value;
var carInput = document.getElementById("carPayment").value;
var studentInput = document.getElementById("studentLoanPayment").value;
var cardInput = document.getElementById("creditCardPayment").value;
var otherInput = document.getElementById("otherDebt").value;
// 2. Parse values (treat empty inputs as 0)
var income = parseFloat(incomeInput);
var rent = rentInput === "" ? 0 : parseFloat(rentInput);
var car = carInput === "" ? 0 : parseFloat(carInput);
var student = studentInput === "" ? 0 : parseFloat(studentInput);
var card = cardInput === "" ? 0 : parseFloat(cardInput);
var other = otherInput === "" ? 0 : parseFloat(otherInput);
// 3. Validation
if (isNaN(income) || income <= 0) {
alert("Please enter a valid Monthly Gross Income greater than 0.");
return;
}
// Ensure no negative numbers
if (rent < 0 || car < 0 || student < 0 || card < 0 || other < 0) {
alert("Debt values cannot be negative.");
return;
}
// 4. Calculations
var totalDebt = rent + car + student + card + other;
var dtiRatio = (totalDebt / income) * 100;
// Round to 2 decimal places
var dtiFinal = Math.round(dtiRatio * 100) / 100;
// 5. Update UI
var resultsContainer = document.getElementById("resultsContainer");
var displayTotalDebt = document.getElementById("displayTotalDebt");
var displayDtiPercent = document.getElementById("displayDtiPercent");
var dtiStatusBox = document.getElementById("dtiStatusBox");
var dtiExplanation = document.getElementById("dtiExplanation");
displayTotalDebt.innerHTML = "$" + totalDebt.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
displayDtiPercent.innerHTML = dtiFinal + "%";
// 6. Determine Status Logic
var statusText = "";
var statusClass = "";
var explanationText = "";
if (dtiFinal 36 && dtiFinal <= 43) {
statusText = "Manageable";
statusClass = "status-manageable";
explanationText = "Your DTI is acceptable for most lenders, though you are approaching the upper limit for Qualified Mortgages.";
} else {
statusText = "High Risk";
statusClass = "status-danger";
explanationText = "Your DTI is above the standard 43% threshold. Lenders may view this as risky. Consider paying down debt before applying.";
}
// Apply classes and text
dtiStatusBox.className = "dti-status " + statusClass;
dtiStatusBox.innerHTML = statusText;
dtiExplanation.innerHTML = explanationText;
// Show results
resultsContainer.style.display = "block";
// Scroll to results for mobile
resultsContainer.scrollIntoView({behavior: "smooth"});
}