function calculateDTI() {
// Get input values and ensure they are numbers. Default to 0 if empty or NaN.
var income = parseFloat(document.getElementById('dti_gross_income').value) || 0;
var housing = parseFloat(document.getElementById('dti_mortgage_rent').value) || 0;
var cars = parseFloat(document.getElementById('dti_car_loans').value) || 0;
var students = parseFloat(document.getElementById('dti_student_loans').value) || 0;
var cards = parseFloat(document.getElementById('dti_credit_cards').value) || 0;
var other = parseFloat(document.getElementById('dti_other_debt').value) || 0;
var resultDiv = document.getElementById('dti_result');
// Validate Income
if (income <= 0) {
resultDiv.style.display = "block";
resultDiv.innerHTML = 'Please enter a valid Gross Monthly Income greater than zero.';
return;
}
// Calculate Total Monthly Debt
var totalDebt = housing + cars + students + cards + other;
// Calculate DTI Ratio
var dtiRatio = (totalDebt / income) * 100;
// Determine Status and Formatting
var statusMessage = "";
var statusClass = "";
if (dtiRatio 36 && dtiRatio 43 && dtiRatio <= 50) {
statusMessage = "High Caution. You may still qualify for some loans (like FHA), but lenders will scrutinize your application.";
statusClass = "status-warning";
} else {
statusMessage = "Critical. It may be very difficult to secure a mortgage with this DTI ratio.";
statusClass = "status-danger";
}
// Display Result
resultDiv.style.display = "block";
resultDiv.innerHTML =
'Your Total Monthly Debt: $' + totalDebt.toFixed(2) + '' +
'Your DTI Ratio is: ' + dtiRatio.toFixed(2) + '%' +
'Lender View: ' + statusMessage + '';
}
Understanding Your Debt-to-Income (DTI) Ratio for Mortgage Approval
When you apply for a mortgage, lenders look at more than just your credit score. One of the most critical metrics they evaluate is your Debt-to-Income (DTI) ratio. This figure helps lenders assess your ability to manage monthly payments and repay the money you plan to borrow.
What is a Debt-to-Income Ratio?
Your DTI ratio is the percentage of your gross monthly income (before taxes) that goes toward paying your recurring monthly debts. It is a snapshot of your financial health that tells lenders how leveraged you currently are.
There are generally two types of DTI ratios lenders consider:
Front-End Ratio: This only accounts for your housing costs (proposed mortgage principal, interest, taxes, and insurance) divided by your gross income.
Back-End Ratio: This is the more comprehensive figure calculated by the tool above. It includes your housing costs plus all other monthly debt obligations like car loans, student loans, and credit card minimums.
How is DTI Calculated?
The math is relatively straightforward. You sum up all your minimum monthly debt payments and divide that total by your gross monthly income. Finally, multiply by 100 to get a percentage.
A Realistic Example:
Let's say your household has a gross annual salary of $84,000, which equals a gross monthly income of $7,000.
Proposed Mortgage Payment: $1,800
Car Loan Payment: $400
Student Loan Payment: $250
Credit Card Minimums: $150
Your total monthly debt obligations are $1,800 + $400 + $250 + $150 = $2,600.
To find the DTI: ($2,600 / $7,000) * 100 = 37.14%.
What is a "Good" DTI Ratio for Buying a Home?
While requirements vary by lender and loan type, here are general benchmarks used in the mortgage industry:
36% or Lower (Ideal): This is considered a healthy DTI. It indicates you have significant disposable income and are seen as a low-risk borrower.
37% to 43% (Manageable): This range is typically acceptable for most conventional mortgages. The "Qualified Mortgage" rule generally sets the limit at 43%, though exceptions exist.
44% to 50% (High Risk): It becomes significantly harder to qualify for conventional financing in this range. You may need to look at FHA loans, which sometimes allow higher DTIs depending on your credit score and reserves.
Over 50% (Critical): With more than half your gross income going to debt, lenders will view you as high risk, making loan approval very difficult without adding a co-borrower or significantly reducing debt.
Why Your DTI Ratio Matters
A high DTI ratio suggests that you might struggle to handle additional debt, increasing the risk that you might default on a mortgage. Even if you have an excellent credit score, a DTI ratio above the lender's threshold can result in a loan denial or require you to pay a higher interest rate. Keeping your DTI low is crucial for securing the best possible loan terms.