Determine your eligibility for mortgages and loans
Understanding Your Debt-to-Income Ratio
The Debt-to-Income (DTI) ratio is a critical financial metric used by lenders, particularly mortgage providers, to measure your ability to manage monthly payments and repay debts. It compares your total monthly debt obligations to your gross monthly income (before taxes and deductions).
36% or Less: Considered ideal. Most lenders view this as a manageable level of debt.
37% to 43%: Generally acceptable, though some conventional lenders may start requiring additional documentation or higher credit scores.
43% to 50%: The maximum limit for most qualified mortgages. You may struggle to find competitive interest rates.
Over 50%: High risk. It is likely you will be denied for new credit lines or mortgages until debt is reduced.
Realistic Example
If you earn $6,000 per month gross and have the following expenses:
Mortgage: $1,800
Car Loan: $400
Credit Cards: $200
Your total monthly debt is $2,400. Your DTI would be 40% ($2,400 / $6,000), which falls within the standard acceptable range for many loan programs.
function calculateDTI() {
var grossIncome = parseFloat(document.getElementById('grossIncome').value) || 0;
var rentDebt = parseFloat(document.getElementById('rentDebt').value) || 0;
var autoDebt = parseFloat(document.getElementById('autoDebt').value) || 0;
var studentDebt = parseFloat(document.getElementById('studentDebt').value) || 0;
var ccDebt = parseFloat(document.getElementById('ccDebt').value) || 0;
var otherDebt = parseFloat(document.getElementById('otherDebt').value) || 0;
var resultBox = document.getElementById('dti-result-box');
var percentageDiv = document.getElementById('dti-percentage');
var statusDiv = document.getElementById('dti-status');
var explanationDiv = document.getElementById('dti-explanation');
if (grossIncome <= 0) {
alert("Please enter a valid gross monthly income.");
return;
}
var totalMonthlyDebt = rentDebt + autoDebt + studentDebt + ccDebt + otherDebt;
var dtiRatio = (totalMonthlyDebt / grossIncome) * 100;
var formattedDTI = dtiRatio.toFixed(1);
resultBox.style.display = "block";
percentageDiv.innerHTML = formattedDTI + "%";
if (dtiRatio <= 36) {
resultBox.style.backgroundColor = "#e8f5e9";
percentageDiv.style.color = "#2e7d32";
statusDiv.innerHTML = "Excellent – Healthy Ratio";
statusDiv.style.color = "#2e7d32";
explanationDiv.innerHTML = "Lenders generally see this as a very safe level of debt. You are likely to qualify for the best mortgage rates.";
} else if (dtiRatio <= 43) {
resultBox.style.backgroundColor = "#fff3e0";
percentageDiv.style.color = "#ef6c00";
statusDiv.innerHTML = "Good – Standard Ratio";
statusDiv.style.color = "#ef6c00";
explanationDiv.innerHTML = "This is a manageable ratio. 43% is typically the highest ratio a borrower can have and still get a Qualified Mortgage.";
} else if (dtiRatio <= 50) {
resultBox.style.backgroundColor = "#fbe9e7";
percentageDiv.style.color = "#d84315";
statusDiv.innerHTML = "High – Limit Reached";
statusDiv.style.color = "#d84315";
explanationDiv.innerHTML = "You may find it difficult to qualify for traditional loans. Consider paying off small balances to lower your ratio.";
} else {
resultBox.style.backgroundColor = "#ffebee";
percentageDiv.style.color = "#c62828";
statusDiv.innerHTML = "Critical – Over Limit";
statusDiv.style.color = "#c62828";
explanationDiv.innerHTML = "Your debt levels are significantly high relative to your income. Most lenders will require a lower DTI before approving new credit.";
}
}