Check your financial health for mortgage and loan eligibility
Total income before taxes
Your DTI Ratio:
Understanding Your Debt-to-Income (DTI) Ratio
The Debt-to-Income (DTI) ratio is a crucial financial metric used by lenders, particularly mortgage providers, to assess your ability to manage monthly payments and repay debts. It compares your total monthly debt obligations to your gross monthly income.
How to Calculate DTI
The formula for calculating your DTI ratio is straightforward:
35% or Less (Ideal): Lenders view you as low-risk. You likely have enough disposable income to handle new credit.
36% to 43% (Manageable): Most lenders consider this acceptable for mortgages, though you may face stricter scrutiny.
44% to 50% (High): You are considered high-risk. You may struggle to qualify for traditional loans without significant collateral or a co-signer.
Over 50% (Critical): You have very little flexibility in your budget. Financial experts recommend aggressive debt reduction.
Real-World Example
Imagine Sarah earns $6,000 per month (Gross Income). Her monthly expenses include:
🏠 Mortgage: $1,800
🚗 Car Loan: $400
💳 Credit Card: $200
Total Debt: $2,400
Sarah's DTI calculation: ($2,400 / $6,000) = 0.40, or 40%. This places her in the "Manageable" category for most lenders.
function calculateDTI() {
var income = parseFloat(document.getElementById("grossIncome").value) || 0;
var housing = parseFloat(document.getElementById("housingCost").value) || 0;
var car = parseFloat(document.getElementById("carDebt").value) || 0;
var credit = parseFloat(document.getElementById("creditDebt").value) || 0;
var student = parseFloat(document.getElementById("studentDebt").value) || 0;
var other = parseFloat(document.getElementById("otherDebt").value) || 0;
var resultDiv = document.getElementById("dtiResult");
var ratioSpan = document.getElementById("ratioPercentage");
var statusP = document.getElementById("ratioStatus");
var adviceP = document.getElementById("ratioAdvice");
if (income <= 0) {
alert("Please enter a valid gross monthly income.");
return;
}
var totalDebt = housing + car + credit + student + other;
var dtiRatio = (totalDebt / income) * 100;
var roundedRatio = dtiRatio.toFixed(2);
resultDiv.style.display = "block";
ratioSpan.innerText = roundedRatio + "%";
if (dtiRatio <= 35) {
resultDiv.style.backgroundColor = "#e8f6ef";
statusP.style.color = "#27ae60";
statusP.innerText = "Excellent Financial Health";
adviceP.innerText = "Lenders generally view this as a safe level of debt. You are in a strong position to qualify for new loans.";
} else if (dtiRatio <= 43) {
resultDiv.style.backgroundColor = "#fff9e6";
statusP.style.color = "#f39c12";
statusP.innerText = "Manageable Debt Level";
adviceP.innerText = "You are within the limits for most mortgage lenders, but consider paying down small debts to lower your ratio further.";
} else if (dtiRatio <= 50) {
resultDiv.style.backgroundColor = "#fff4f2";
statusP.style.color = "#e67e22";
statusP.innerText = "High Debt Burden";
adviceP.innerText = "Lenders may see you as high-risk. It might be difficult to secure competitive interest rates on new credit.";
} else {
resultDiv.style.backgroundColor = "#fdeaea";
statusP.style.color = "#c0392b";
statusP.innerText = "Critical Debt Level";
adviceP.innerText = "Your debt significantly outweighs your income. Focus on debt consolidation or reduction before applying for new loans.";
}
}