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Debt-to-Income (DTI) Ratio Calculator

Enter your monthly gross income and total monthly debt payments to see your DTI ratio.

function calculateDTIRatio() { var incomeInput = document.getElementById('dtiGrossIncome'); var debtInput = document.getElementById('dtiTotalMonthlyDebt'); var resultDiv = document.getElementById('dtiResultOutput'); var grossIncome = parseFloat(incomeInput.value); var totalDebt = parseFloat(debtInput.value); resultDiv.style.display = 'block'; // Input Validation if (isNaN(grossIncome) || grossIncome <= 0) { resultDiv.innerHTML = 'Please enter a valid Gross Monthly Income greater than zero.'; return; } if (isNaN(totalDebt) || totalDebt < 0) { resultDiv.innerHTML = 'Please enter valid Total Monthly Debt Payments (zero or higher).'; return; } // DTI Calculation Formula: (Total Monthly Debt / Gross Monthly Income) * 100 var dtiRatio = (totalDebt / grossIncome) * 100; var dtiRounded = dtiRatio.toFixed(2); // Interpretation logic based on standard financial guidelines var interpretation = ""; var statusColor = ""; if (dtiRounded <= 35) { interpretation = "Excellent. Lenders view you as a low-risk borrower. You are in a strong position to take on new credit if needed."; statusColor = "#28a745"; // Green } else if (dtiRounded <= 43) { interpretation = "Good / Manageable. You fall within the typical limits for most qualified mortgages, though lenders may scrutinize your application closer to 43%."; statusColor = "#856404"; // Dark Yellow/Gold } else if (dtiRounded <= 50) { interpretation = "Concern.Lenders may consider you higher risk. You might face higher interest rates or difficulty getting approved for major loans."; statusColor = "#fd7e14"; // Orange } else { interpretation = "Critical. Your debt load is very high relative to your income. Focus on paying down existing debt before seeking new credit."; statusColor = "#dc3545"; // Red } resultDiv.innerHTML = '

Your Result:

' + " + dtiRounded + '% DTI Ratio' + 'Analysis: ' + interpretation + " + 'Note: This is a general estimate. Specific lender requirements vary.'; }

Understanding Your Debt-to-Income (DTI) Ratio

Your Debt-to-Income (DTI) ratio is a critical financial metric used by lenders to gauge your ability to manage monthly payments and repay debts. It is expressed as a percentage and represents the portion of your gross monthly income that goes toward paying debts.

A lower DTI shows that you have a good balance between debt and income. Conversely, a higher DTI percentage indicates that a significant amount of your pre-tax income is already committed to debt obligations, which may make lenders hesitant to extend further credit.

Why DTI Matters

If you are planning to apply for a mortgage, auto loan, or personal loan, your DTI ratio is one of the first things lenders look at. It helps them determine the risk associated with lending to you. For example, in mortgage lending, the "Qualified Mortgage" rule generally recommends a maximum back-end DTI of 43% for approval, although some loan programs allow for higher ratios with compensating factors.

How DTI Is Calculated

The formula for calculating DTI is relatively straightforward. It involves two main components:

1. Total Monthly Debt Payments: This includes recurrent monthly obligations such as your housing payment (rent or mortgage principal, interest, taxes, and insurance), car loan payments, student loan payments, child support, and minimum monthly credit card payments. It generally does not include utilities, food, or entertainment costs.
2. Gross Monthly Income: This is your total income earned before taxes and other deductions are taken out.

The Formula:
(Total Monthly Debt Payments ÷ Gross Monthly Income) × 100 = DTI Percentage

Calculation Example

Let's say your household has the following financials:

• Gross Monthly Income: $6,000
• Mortgage/Rent Payment: $1,500
• Car Payment: $400
• Student Loans: $300
• Minimum Credit Card Payments: $200

First, calculate total debt: $1,500 + $400 + $300 + $200 = $2,400 total monthly debt.

Next, apply the formula: ($2,400 ÷ $6,000) × 100 = 40%.

In this scenario, your DTI ratio is 40%.

What is a Good DTI Ratio?

While specific lender requirements vary, here are general guidelines on how DTI is often viewed:

• 35% or less: Considered excellent. You likely have disposable income and are viewed as financially stable.
• 36% to 43%: Considered manageable for most lenders. You will likely qualify for loans, but you are approaching the upper limit for standard mortgages.
• 44% to 50%: Considered high risk. Lenders may worry about your ability to handle unforeseen expenses. You might require a co-signer or face higher interest rates.
• Over 50%: Considered critical. More than half your gross income goes to debt. It is highly recommended to focus on debt reduction before applying for new credit.

Use the calculator above to determine where you currently stand and identify if you need to adjust your financial strategy before applying for a major loan.