Dti Calculation

Debt-to-Income (DTI) Ratio Calculator

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Total Monthly Income: $0

Total Monthly Debt: $0

function calculateDTI() { var income = parseFloat(document.getElementById('grossIncome').value) || 0; var rent = parseFloat(document.getElementById('rentMortgage').value) || 0; var car = parseFloat(document.getElementById('carPayment').value) || 0; var student = parseFloat(document.getElementById('studentLoans').value) || 0; var credit = parseFloat(document.getElementById('creditCards').value) || 0; var other = parseFloat(document.getElementById('otherDebts').value) || 0; if (income <= 0) { alert('Please enter a valid gross monthly income.'); return; } var totalDebt = rent + car + student + credit + other; var dtiRatio = (totalDebt / income) * 100; document.getElementById('dtiPercentage').innerText = dtiRatio.toFixed(2) + '%'; document.getElementById('resIncome').innerText = '$' + income.toLocaleString(); document.getElementById('resDebt').innerText = '$' + totalDebt.toLocaleString(); var ratingText = ""; var ratingColor = ""; if (dtiRatio <= 35) { ratingText = "Excellent – Your debt is manageable."; ratingColor = "#2e7d32"; } else if (dtiRatio <= 43) { ratingText = "Good – Conventional mortgage limit."; ratingColor = "#f9a825"; } else if (dtiRatio <= 50) { ratingText = "High – You may struggle to find financing."; ratingColor = "#ef6c00"; } else { ratingText = "Critical – Consider debt restructuring."; ratingColor = "#c62828"; } document.getElementById('dtiRating').innerText = ratingText; document.getElementById('dtiRating').style.color = ratingColor; document.getElementById('resultArea').style.display = 'block'; }

Understanding the Debt-to-Income (DTI) Ratio

The Debt-to-Income (DTI) ratio is a critical financial metric used by lenders, particularly mortgage companies, to evaluate an individual's ability to manage monthly payments and repay debts. It represents the percentage of your gross monthly income that goes toward paying your fixed monthly debts.

How to Calculate DTI

The calculation is straightforward: divide your total monthly debt obligations by your gross monthly income (before taxes and deductions), then multiply by 100 to get a percentage.

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

Real-World Example

Imagine a scenario with the following financial data:

• Gross Monthly Income: $6,000
• Mortgage Payment: $1,800
• Car Loan: $400
• Credit Card Minimum: $100

Total Monthly Debt: $2,300
Calculation: ($2,300 / $6,000) = 0.3833
DTI Ratio: 38.33%

DTI Thresholds for Borrowing

While requirements vary by lender, these general benchmarks apply to most mortgage applications:

DTI Range	Lender Perspective
35% or less	Excellent: Low risk and high likelihood of approval.
36% – 43%	Good: Standard for most conventional loans.
44% – 50%	High: May require specific loan programs (like FHA).
Over 50%	Critical: Extremely difficult to qualify for new credit.

Front-End vs. Back-End DTI

Lenders often look at two specific types of DTI:

1. Front-End Ratio: Only includes housing-related expenses (mortgage, taxes, insurance) divided by income.
2. Back-End Ratio: Includes housing costs PLUS all other recurring debts (the calculation used in this tool).

Most lenders focus more heavily on the Back-End Ratio as it provides a comprehensive view of your financial health.