Your Debt-to-Income (DTI) ratio is a critical financial metric used by lenders to assess your ability to manage monthly payments and repay debts. It is a percentage that represents how much of your gross monthly income goes toward paying your debts.
Lenders, particularly mortgage lenders, look at DTI to determine creditworthiness. A lower DTI indicates that you have a good balance between debt and income, suggesting you are less risky as a borrower. Conversely, a high DTI may signal that you are overleveraged and might struggle to take on additional debt.
How DTI is Calculated
The calculation is straightforward: divide your total recurring monthly debt payments by your gross monthly income (your income before taxes and deductions). The resulting decimal is then multiplied by 100 to get the percentage.
Typically, lenders look at the "back-end ratio," which includes all monthly debt obligations, such as:
Rent or mortgage payments (including taxes and insurance)
Car loans or leases
Student loans
Credit card minimum payments
Personal loans
Alimony or child support
It usually does not include monthly expenses like groceries, utilities, gas, or entertainment.
What is a Good DTI Ratio?
While lender requirements vary, here are general guidelines regarding DTI thresholds:
35% or lower: Generally considered excellent. You likely have manageable debt and disposable income.
36% to 43%: Often viewed as acceptable. You may still qualify for loans, but perhaps not at the best interest rates. 43% is typically the highest DTI a borrower can have to get a Qualified Mortgage.
44% to 49%: Considered high risk. You may face difficulties getting approved for new credit.
50% or higher: Indicates financial distress. A significant portion of your income is tied up in debt, and lenders will view you as very high risk.
Debt-to-Income Ratio Calculator
Use the calculator below to estimate your current DTI ratio. Enter your gross monthly income and all recurring monthly debt payments.
Monthly Income
Monthly Debt Obligations
Your Results
Total Monthly Debt: $0.00
Your DTI Ratio: 0.00%
function calculateDTI() {
// 1. Get Input Values
var grossIncomeStr = document.getElementById('grossIncome').value;
var mortgageRentStr = document.getElementById('mortgageRent').value;
var carLoansStr = document.getElementById('carLoans').value;
var studentLoansStr = document.getElementById('studentLoans').value;
var creditCardsStr = document.getElementById('creditCards').value;
var otherDebtStr = document.getElementById('otherDebt').value;
// 2. Parse Inputs to Floats, handle empty inputs as 0
var grossIncome = parseFloat(grossIncomeStr) || 0;
var mortgageRent = parseFloat(mortgageRentStr) || 0;
var carLoans = parseFloat(carLoansStr) || 0;
var studentLoans = parseFloat(studentLoansStr) || 0;
var creditCards = parseFloat(creditCardsStr) || 0;
var otherDebt = parseFloat(otherDebtStr) || 0;
// 3. Validation to prevent errors
if (grossIncome <= 0) {
alert("Please enter a valid Gross Monthly Income greater than zero.");
document.getElementById('dtiResultArea').style.display = 'none';
return;
}
// 4. Calculate Total Monthly Debt
var totalMonthlyDebt = mortgageRent + carLoans + studentLoans + creditCards + otherDebt;
// 5. Calculate DTI Ratio
var dtiRatio = (totalMonthlyDebt / grossIncome) * 100;
// 6. Determine Interpretation and Color
var interpretationText = "";
var percentageColor = "#28a745"; // Default green
if (dtiRatio 35 && dtiRatio 43 && dtiRatio < 50) {
interpretationText = "High Risk: You may face challenges securing new credit or favorable terms. Consider reducing debt.";
percentageColor = "#b58900"; // Orange/Dark Yellow
} else {
interpretationText = "Critical: This ratio indicates financial distress. It is highly recommended to consult a financial advisor and focus on debt reduction.";
percentageColor = "#dc3545"; // Red
}
// 7. Display Results
document.getElementById('totalDebtResult').innerText = totalMonthlyDebt.toFixed(2);
var dtiSpan = document.getElementById('dtiPercentageResult');
dtiSpan.innerText = dtiRatio.toFixed(1) + "%";
dtiSpan.style.color = percentageColor;
document.getElementById('dtiInterpretation').innerText = interpretationText;
document.getElementById('dtiResultArea').style.display = 'block';
}