Dti Ratio Calculation

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Debt-to-Income (DTI) Ratio Calculator

Include salary, bonuses, and other income.
Include rent/mortgage, taxes, and insurance.

Other Monthly Debt Payments

Your DTI Ratio: 0%

function calculateDTI() { var income = parseFloat(document.getElementById('grossIncome').value) || 0; var housing = parseFloat(document.getElementById('monthlyHousing').value) || 0; var car = parseFloat(document.getElementById('carLoans').value) || 0; var student = parseFloat(document.getElementById('studentLoans').value) || 0; var cards = parseFloat(document.getElementById('creditCards').value) || 0; var other = parseFloat(document.getElementById('otherDebt').value) || 0; if (income <= 0) { alert("Please enter a valid monthly income."); return; } var totalDebt = housing + car + student + cards + other; var ratio = (totalDebt / income) * 100; var resultDiv = document.getElementById('dtiResult'); var ratioSpan = document.getElementById('finalRatio'); var statusP = document.getElementById('dtiStatus'); var adviceP = document.getElementById('dtiAdvice'); ratioSpan.innerText = ratio.toFixed(2) + "%"; resultDiv.style.display = "block"; if (ratio 35 && ratio 43 && ratio <= 50) { statusP.innerText = "Status: Fair (High Risk)"; statusP.style.color = "#c53030"; adviceP.innerText = "You have limited room in your budget. Lenders may require additional evidence of financial stability."; } else { statusP.innerText = "Status: High (Extreme Risk)"; statusP.style.color = "#9b2c2c"; adviceP.innerText = "You may struggle to secure new credit. Consider aggressive debt repayment strategies to lower this ratio."; } }

Understanding the Debt-to-Income (DTI) Ratio

The Debt-to-Income (DTI) ratio is a crucial financial metric used by lenders to evaluate a borrower's ability to manage monthly payments and repay debts. It compares your total monthly debt obligations to your gross monthly income.

The DTI Formula

To calculate your DTI ratio manually, use the following math:

DTI = (Total Monthly Debt Payments / Gross Monthly Income) x 100

What Debts Are Included?

When lenders calculate your ratio, they typically look at recurring monthly payments, including:

  • Housing Costs: Mortgage principal, interest, taxes, and homeowners insurance (PITI) or rent.
  • Auto Loans: Monthly payments for cars, motorcycles, or boats.
  • Student Loans: Even if they are in deferment, lenders often calculate a percentage of the balance.
  • Credit Cards: The minimum monthly payment required on all cards.
  • Personal Loans: Monthly installments for signature loans or consolidation loans.
  • Child Support/Alimony: Court-ordered monthly obligations.

Why DTI Matters for Your Mortgage

For most conventional loans, lenders prefer a DTI ratio of 36% or lower. However, some loan programs (like FHA) allow for ratios up to 43%, and in some specific cases, up to 50% with compensating factors like a high credit score or significant cash reserves.

DTI Range Lender Perception
Below 35% Ideal; plenty of disposable income.
36% – 43% Acceptable; standard for most mortgage approvals.
44% – 50% High; may require extra documentation or higher rates.
Over 50% Critical; very difficult to qualify for new loans.

Real-World Example Calculation

Imagine Sarah earns $6,000 per month before taxes. Her monthly bills include:

  • Mortgage: $1,500
  • Car Loan: $400
  • Student Loan: $300
  • Credit Card Minimums: $100

Total Monthly Debt: $2,300
Calculation: ($2,300 / $6,000) = 0.3833
Sarah's DTI: 38.3%

In this scenario, Sarah would likely qualify for most standard financing options, though she is slightly above the "ideal" 36% mark.

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