Minnesota Income Tax Rate Calculator

Debt-to-Income (DTI) Ratio Calculator

Calculate your DTI to see if you qualify for a mortgage or loan.

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 use this ratio to assess your ability to manage monthly payments and repay the money you plan to borrow.

Specifically, the DTI formula divides your total recurring monthly debt by your gross monthly income (income before taxes).

How to Calculate DTI

The mathematical formula used in our calculator is straightforward:

DTI = (Total Monthly Debt Payments / Gross Monthly Income) x 100

Example: If you earn $60,000 annually ($5,000/month) and have a mortgage of $1,200, a car payment of $400, and minimum credit card payments of $150, your total debt is $1,750. Your DTI would be ($1,750 / $5,000) x 100 = 35%.

Understanding Your Results

Most lenders have strict thresholds for DTI ratios when approving mortgages or personal loans. Here is a general breakdown:

• 35% or less: Generally viewed as good. You likely have manageable debt relative to your income.
• 36% to 49%: You are managing your debt, but lenders might ask for additional eligibility criteria. You may be seen as a moderate risk.
• 50% or more: Considered high. You may have difficulty finding a loan, or you might be offered higher interest rates because your spending is high relative to your income.

Front-End vs. Back-End Ratio

While this calculator provides your overall (Back-End) DTI, lenders also look at the "Front-End" ratio, which only includes housing costs. Conventional loans typically prefer a back-end ratio under 43%, though FHA loans can sometimes go higher.

Frequently Asked Questions

Does DTI affect my credit score?

No, your DTI ratio is not listed on your credit report and does not directly impact your credit score. However, high credit utilization (which often accompanies high DTI) does lower your score.

What income should I include?

Include your gross annual income. This includes salary, bonuses, tips, pension, and any consistent alimony or child support payments you receive.

function calculateDTI() { // 1. Get Input Values var grossAnnual = parseFloat(document.getElementById('gross_income').value); var rent = parseFloat(document.getElementById('monthly_rent').value) || 0; var car = parseFloat(document.getElementById('monthly_car').value) || 0; var cards = parseFloat(document.getElementById('monthly_cards').value) || 0; var student = parseFloat(document.getElementById('monthly_student').value) || 0; var other = parseFloat(document.getElementById('monthly_other').value) || 0; // 2. Validate Input if (isNaN(grossAnnual) || grossAnnual <= 0) { alert("Please enter a valid Annual Gross Income."); return; } // 3. Perform Calculations var monthlyIncome = grossAnnual / 12; var totalMonthlyDebt = rent + car + cards + student + other; var dtiRatio = (totalMonthlyDebt / monthlyIncome) * 100; // 4. Update Result Elements document.getElementById('res-income').innerText = "$" + monthlyIncome.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('res-debt').innerText = "$" + totalMonthlyDebt.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('res-dti').innerText = dtiRatio.toFixed(2) + "%"; // 5. Determine Status Message var statusDiv = document.getElementById('dti-status-msg'); statusDiv.className = 'dti-status'; // Reset classes if (dtiRatio 35 && dtiRatio 43 && dtiRatio <= 49) { statusDiv.innerText = "Warning: Lenders may consider you a higher risk."; statusDiv.classList.add('status-warning'); } else { statusDiv.innerText = "High Risk: You may struggle to qualify for new debt."; statusDiv.classList.add('status-bad'); } // 6. Show Results document.getElementById('dti-result-container').style.display = 'block'; }