How to Calculate Interest Rate on Savings per Month
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Debt-to-Income (DTI) Ratio Calculator
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"text": "Generally, lenders prefer a DTI ratio below 36%, with no more than 28% of that debt going towards your mortgage or rent. A DTI up to 43% is often the highest ratio a borrower can have and still get a Qualified Mortgage."
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"text": "To calculate DTI, add up all your monthly debt payments (rent/mortgage, student loans, car loans, credit card minimums) and divide that total by your gross monthly income (before taxes). Multiply the result by 100 to get the percentage."
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Debt-to-Income (DTI) Ratio Calculator
Understanding your financial health starts with knowing your Debt-to-Income (DTI) ratio. This critical metric is used by mortgage lenders, banks, and credit card issuers to determine your ability to manage monthly payments and repay debts. Use our comprehensive tool below to calculate your current DTI instantly.
Calculate Your DTI Ratio
Your total income before taxes and deductions.
Enter the minimum monthly payment, not total balance.
Alimony, child support, personal loans, etc.
Total Monthly Debt:$0.00
DTI Ratio:0.00%
function calculateDTI() {
// Retrieve inputs
var income = parseFloat(document.getElementById('grossIncome').value);
var mortgage = parseFloat(document.getElementById('mortgageRent').value) || 0;
var car = parseFloat(document.getElementById('carPayment').value) || 0;
var student = parseFloat(document.getElementById('studentLoans').value) || 0;
var credit = parseFloat(document.getElementById('creditCards').value) || 0;
var other = parseFloat(document.getElementById('otherDebt').value) || 0;
// Validation
if (!income || income <= 0) {
alert("Please enter a valid Gross Monthly Income to calculate your ratio.");
return;
}
// Calculation logic
var totalDebt = mortgage + car + student + credit + other;
var dti = (totalDebt / income) * 100;
// Display results
var resultBox = document.getElementById('resultBox');
var displayDebt = document.getElementById('displayTotalDebt');
var displayDTI = document.getElementById('displayDTI');
var verdictBox = document.getElementById('dtiVerdict');
resultBox.style.display = "block";
displayDebt.innerHTML = "$" + totalDebt.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
displayDTI.innerHTML = dti.toFixed(2) + "%";
// Logic for DTI Category
var verdictText = "";
var verdictBg = "";
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if (dti <= 35) {
verdictText = "Excellent: You look very favorable to lenders.";
verdictBg = "#d4edda";
verdictColor = "#155724";
} else if (dti <= 43) {
verdictText = "Good: You are likely eligible for most mortgages.";
verdictBg = "#fff3cd";
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} else if (dti <= 49) {
verdictText = "Caution: You may have trouble finding approval.";
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} else {
verdictText = "Critical: High risk. Focus on paying down debt.";
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verdictBox.innerHTML = verdictText;
verdictBox.style.backgroundColor = verdictBg;
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What is Debt-to-Income Ratio?
Your Debt-to-Income (DTI) ratio is a personal finance measure that compares your monthly debt payment to your monthly gross income. It is calculated as a percentage and is one of the primary indicators used by lenders to assess your creditworthiness.
Unlike your credit score, which looks at your history of paying bills, your DTI looks at your current capacity to take on new debt. A low DTI demonstrates a good balance between debt and income.
How Lenders View Your DTI
When applying for a mortgage or a significant loan, lenders categorize DTI ratios into general tiers:
35% or less: Generally viewed as excellent. Lenders see you as a low-risk borrower who has manageable debt.
36% to 43%: This is the standard range for mortgage approval. The "43% rule" is often used by the FHA and other agencies as a cutoff for Qualified Mortgages, though exceptions exist.
44% to 49%: You may still find lenders, but you might face higher interest rates or be required to have larger cash reserves.
50% or higher: Borrowing becomes very difficult. Lenders usually view this as a sign of financial distress, indicating you have little room in your budget for unexpected expenses or new payments.
How to Calculate DTI Manually
If you want to understand the math behind our DTI calculator, the formula is straightforward:
Sum your monthly debts: Include rent/mortgage, minimum credit card payments, student loans, auto loans, and other recurring debt obligations. Do not include utilities, groceries, or taxes.
Determine gross monthly income: This is your income before taxes, insurance, and 401(k) contributions are taken out.
Divide and Multiply: Divide your Total Monthly Debt by your Gross Monthly Income, then multiply by 100.
If your calculation shows a percentage higher than 43%, consider these steps to improve your standing before applying for a loan:
Pay off high-interest credit cards: Reducing your monthly minimum payment requirements is the fastest way to lower DTI.
Refinance loans: Extending the term of a car loan or student loan can lower the monthly payment, thereby lowering your DTI (though you may pay more interest over time).
Increase Income: Taking on a side gig or asking for a raise increases the denominator in the equation, lowering the overall percentage.
Avoid new debt: Do not open new credit lines or finance large purchases in the months leading up to a mortgage application.
Disclaimer: This calculator is for educational purposes only and does not constitute financial advice. Lending criteria vary by institution and loan type.