Money Market Fund Interest Rate Calculator

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Debt-to-Income (DTI) Ratio Calculator

Enter your monthly figures below to see where you stand with lenders.

Monthly Recurring Debt Payments

function calculateDTI() { var grossIncomeInput = document.getElementById('grossIncome').value; var grossIncome = parseFloat(grossIncomeInput); // Handle empty optional inputs by defaulting to 0 var mortgageRent = parseFloat(document.getElementById('mortgageRent').value) || 0; var carLoans = parseFloat(document.getElementById('carLoans').value) || 0; var studentLoans = parseFloat(document.getElementById('studentLoans').value) || 0; var creditCards = parseFloat(document.getElementById('creditCards').value) || 0; var otherDebt = parseFloat(document.getElementById('otherDebt').value) || 0; var resultDiv = document.getElementById('dtiResult'); resultDiv.style.display = 'block'; if (isNaN(grossIncome) || grossIncome <= 0) { resultDiv.innerHTML = 'Please enter a valid Gross Monthly Income greater than zero.'; return; } var totalMonthlyDebt = mortgageRent + carLoans + studentLoans + creditCards + otherDebt; // Avoid division by zero if income is somehow zero despite check, though redundant here it's safe practice. if (grossIncome === 0) { resultDiv.innerHTML = 'Income cannot be zero.'; return; } var dtiRatioDec = totalMonthlyDebt / grossIncome; var dtiRatioPercent = dtiRatioDec * 100; var analysis = ""; var analysisColor = ""; if (dtiRatioPercent 35 && dtiRatioPercent 43 && dtiRatioPercent <= 50) { analysis = "Concerning. You may face difficulties getting approved for a mortgage."; analysisColor = "#e67e22"; // Darker Orange } else { analysis = "High Risk. Lenders will likely view your debt load as excessive for new credit."; analysisColor = "#d63638"; // Red } resultDiv.innerHTML = '

Your DTI Ratio: ' + dtiRatioPercent.toFixed(1) + '%

' + " + analysis + " + 'Total monthly debt obligations calculated: $' + totalMonthlyDebt.toFixed(2) + ' vs Gross Income: $' + grossIncome.toFixed(2) + ''; }

Understanding Your Debt-to-Income (DTI) Ratio

Your Debt-to-Income (DTI) ratio is one of the most critical metrics lenders use to assess your financial health. Before approving you for a mortgage, auto loan, or credit card, financial institutions want to know if you can comfortably afford to take on new debt. The DTI ratio provides a snapshot of how much of your current monthly income is already tied up in debt repayments.

Essentially, it answers the question: "For every dollar you earn before taxes, how many cents go immediately to servicing debt?"

How is DTI Calculated?

The formula used by the calculator above is straightforward. It takes your total recurring monthly debt payments and divides them by your gross monthly income (your income before taxes and deductions). The resulting decimal is multiplied by 100 to get a percentage.

The Formula: (Total Monthly Debt Payments / Gross Monthly Income) x 100 = DTI %

What Goes Into the Calculation?

To get an accurate DTI ratio, you must include the correct types of expenses. Lenders are interested in recurring debt obligations, not your day-to-day living expenses.

Include these in the calculator:

  • Monthly rent or mortgage payments (including principal, interest, taxes, and insurance).
  • Minimum monthly credit card payments.
  • Auto loan, student loan, or personal loan payments.
  • Alimony or child support payments you are required to make.

Do NOT include these:

  • Utility bills (electricity, water, internet).
  • Groceries and dining out.
  • Gas and transportation costs (other than the car loan itself).
  • Health insurance premiums or medical bills (unless financed as a loan).
  • Entertainment subscriptions.

Interpreting Your Results: What is a "Good" DTI?

While different lenders have different criteria depending on the loan type and your credit score, there are general benchmarks used in the financial industry:

  • 35% or lower: This is generally considered excellent. It indicates you have disposable income and are a low risk to lenders.
  • 36% to 43%: This range is often viewed as manageable. You will likely find lenders willing to work with you, but 43% is often the highest DTI a borrower can have to still get a Qualified Mortgage.
  • Above 43%: This is considered a high ratio. It signals to lenders that you may have trouble meeting new financial obligations in the event of an emergency. You may face higher interest rates or denial of credit.

A Realistic Example

Let's look at an example of how the math works in the real world using the calculator above.

Imagine Sarah earns a gross annual salary of $72,000. Her Gross Monthly Income is $6,000 ($72,000 / 12).

Her monthly debts are:

  • Rent: $1,600
  • Car Loan: $350
  • Student Loans: $250
  • Credit Card Minimums: $200
  • Total Monthly Debt: $2,400

When Sarah enters these numbers into the calculator, it performs the following math:

($2,400 / $6,000) = 0.40

0.40 x 100 = 40% DTI.

Sarah's 40% DTI means she is in the "manageable" range, but she is approaching the upper limits for standard mortgage qualifications.

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