Your Debt-to-Income (DTI) ratio is one of the most critical metrics lenders use to assess your ability to repay a new loan. Unlike your credit score, which measures your history of paying debts, your DTI measures your current capacity to take on new debt relative to your gross income.
How to Calculate DTI
The calculation is straightforward but requires accuracy. It is calculated by dividing your total monthly debt payments by your gross monthly income (income before taxes).
For example, if your gross monthly income is $5,000 and your total monthly debt payments (including rent/mortgage, car loans, and credit cards) equal $2,000, your DTI is 40%.
Front-End vs. Back-End Ratio
Lenders often look at two different types of DTI:
Front-End Ratio: This only calculates your housing-related expenses (mortgage principal, interest, taxes, insurance, and HOA fees) divided by your income. Lenders typically prefer this to be under 28%.
Back-End Ratio: This includes housing expenses plus all other recurring debt (credit cards, student loans, car payments, etc.). This is the number generated by our calculator above. Most conventional loans require this to be under 36% to 43%.
What is a Good DTI Ratio?
Generally, the lower your DTI, the less risky you appear to lenders. Here is a general breakdown:
35% or less: Excellent. You have manageable debt and likely have money left over for savings.
36% to 43%: Good/Acceptable. You will likely qualify for a mortgage, though you may be asked to reduce some debt. 43% is often the strict cutoff for "Qualified Mortgages".
44% to 49%: High Risk. You may struggle to get approved for conventional loans, though FHA loans might still be an option.
50% or higher: Critical. You are likely spending more than half your income on debt payments, severely limiting your borrowing power.
How to Lower Your DTI
If your ratio is higher than 43%, consider these steps before applying for a mortgage:
Pay off small debts: Eliminating a car payment or clearing a credit card balance can significantly drop your monthly debt obligations.
Increase your income: Taking on a side gig or including a co-borrower on the application increases the denominator in the calculation, lowering the ratio.
Avoid new debt: Do not open new credit lines or make large purchases on credit while preparing to apply for a loan.
function calculateDTI() {
// 1. Get Inputs (Validation: default to 0 if empty or NaN)
var grossIncome = parseFloat(document.getElementById('grossIncome').value) || 0;
var otherIncome = parseFloat(document.getElementById('otherIncome').value) || 0;
var rentMortgage = parseFloat(document.getElementById('rentMortgage').value) || 0;
var hoaInsurance = parseFloat(document.getElementById('hoaInsurance').value) || 0;
var carLoans = parseFloat(document.getElementById('carLoans').value) || 0;
var creditCards = parseFloat(document.getElementById('creditCards').value) || 0;
var studentLoans = parseFloat(document.getElementById('studentLoans').value) || 0;
var otherDebts = parseFloat(document.getElementById('otherDebts').value) || 0;
// 2. Logic Check
var totalIncome = grossIncome + otherIncome;
if (totalIncome <= 0) {
alert("Please enter a valid Gross Monthly Income greater than zero.");
return;
}
// 3. Perform Calculations
var housingDebt = rentMortgage + hoaInsurance;
var consumerDebt = carLoans + creditCards + studentLoans + otherDebts;
var totalDebt = housingDebt + consumerDebt;
var frontEndRatio = (housingDebt / totalIncome) * 100;
var backEndRatio = (totalDebt / totalIncome) * 100;
// 4. Update UI Results
document.getElementById('displayIncome').innerHTML = "$" + totalIncome.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('displayDebt').innerHTML = "$" + totalDebt.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('frontEndResult').innerHTML = frontEndRatio.toFixed(2) + "%";
document.getElementById('backEndResult').innerHTML = backEndRatio.toFixed(2) + "%";
// 5. Determine Status and Message
var statusBox = document.getElementById('dtiStatus');
var messageBox = document.getElementById('dtiMessage');
var statusText = "";
var messageText = "";
// Reset classes
statusBox.className = "status-box";
if (backEndRatio 35 && backEndRatio 43 && backEndRatio <= 49) {
statusBox.classList.add("status-bad");
statusText = "High DTI";
messageText = "You may face difficulties getting approved for a conventional mortgage. FHA might be an option.";
} else {
statusBox.classList.add("status-bad");
statusText = "Critical DTI";
messageText = "Your debt is very high relative to your income. It is highly recommended to lower debts before applying for loans.";
}
statusBox.innerHTML = statusText;
messageBox.innerHTML = messageText;
// Show results
document.getElementById('dti-results').style.display = "block";
}