The Debt-to-Income Ratio (DTI) is a key financial metric used by lenders and financial advisors to assess your ability to manage monthly payments and repay debts. It compares your total monthly debt payments to your gross monthly income.
Total Monthly Debt Payments: This includes all your recurring monthly debt obligations. Common examples include:
Minimum credit card payments
Student loan payments
Auto loan payments
Personal loan payments
Mortgage or rent payments (including property taxes and homeowner's insurance if applicable)
Alimony or child support payments
It generally does NOT include utilities, groceries, or other living expenses unless they are part of a debt repayment plan.
Gross Monthly Income: This is your income before taxes and other deductions. It includes your salary, wages, tips, commissions, and any other regular income you receive.
Interpreting Your DTI Ratio
Lenders often use DTI to determine loan eligibility and the amount you can borrow. While specific thresholds vary by lender and loan type, general guidelines are:
35% or less: Generally considered good. You likely have a manageable debt load.
36% to 43%: This range is often the maximum considered acceptable by many mortgage lenders. It indicates that a significant portion of your income goes to debt.
Over 43%: This is typically considered high. It may be difficult to qualify for new credit or loans, and it suggests potential financial strain.
It's important to note that a lower DTI is usually better, indicating more financial flexibility and a lower risk to lenders. Improving your DTI can involve increasing your income or, more commonly, reducing your debt payments through strategic repayment.
Why DTI Matters
Loan Approval: Crucial for mortgages, auto loans, and personal loans.
Financial Health Indicator: Helps you understand your cash flow and ability to handle expenses.
Budgeting Tool: Assists in planning for future financial goals.
Use this calculator to get a quick estimate of your DTI and take the first step towards better financial management.
function calculateDTI() {
var debtInput = document.getElementById("monthlyDebtPayments").value;
var incomeInput = document.getElementById("grossMonthlyIncome").value;
var monthlyDebt = parseFloat(debtInput);
var grossIncome = parseFloat(incomeInput);
var resultDiv = document.getElementById("result");
var resultValueDiv = document.getElementById("result-value");
var resultCategoryP = document.getElementById("result-category");
resultDiv.style.display = 'block'; // Make sure the result div is visible
if (isNaN(monthlyDebt) || isNaN(grossIncome)) {
resultValueDiv.textContent = "Invalid Input";
resultValueDiv.style.color = "#dc3545"; // Red for errors
resultCategoryP.textContent = "Please enter valid numbers for all fields.";
return;
}
if (grossIncome 43) {
categoryText = "High DTI – Potentially concerning for new credit.";
categoryColor = "#dc3545"; // Red
} else if (dti > 36) {
categoryText = "Moderate to High DTI – May limit borrowing options.";
categoryColor = "#ffc107"; // Warning Yellow
} else if (dti > 0) {
categoryText = "Good DTI – Manageable debt load.";
categoryColor = "#28a745"; // Success Green
} else {
categoryText = "No debt payments recorded.";
categoryColor = "#6c757d"; // Muted Grey
}
resultValueDiv.style.color = categoryColor;
resultCategoryP.textContent = categoryText;
}