Dti Calculator

Debt-to-Income (DTI) Ratio Calculator

Include salary, bonuses, and side income.

Your primary housing expense.

function calculateDTI() { var income = parseFloat(document.getElementById('grossIncome').value) || 0; var rent = parseFloat(document.getElementById('rentMortgage').value) || 0; var car = parseFloat(document.getElementById('carLoan').value) || 0; var student = parseFloat(document.getElementById('studentLoan').value) || 0; var credit = parseFloat(document.getElementById('creditCards').value) || 0; var other = parseFloat(document.getElementById('otherDebts').value) || 0; var resultDiv = document.getElementById('dtiResult'); var valueText = document.getElementById('dtiValue'); var statusText = document.getElementById('dtiStatus'); var adviceText = document.getElementById('dtiAdvice'); if (income <= 0) { alert("Please enter a valid Gross Monthly Income."); return; } var totalMonthlyDebt = rent + car + student + credit + other; var dtiRatio = (totalMonthlyDebt / income) * 100; resultDiv.style.display = "block"; valueText.innerHTML = "Your DTI Ratio: " + dtiRatio.toFixed(2) + "%"; if (dtiRatio 35 && dtiRatio 43 && dtiRatio <= 50) { resultDiv.style.backgroundColor = "#fffde7"; statusText.style.color = "#fbc02d"; statusText.innerHTML = "Status: High / Concerning"; adviceText.innerHTML = "You have limited room in your budget. Lenders may require additional documentation or deny your application."; } else { resultDiv.style.backgroundColor = "#ffebee"; statusText.style.color = "#c62828"; statusText.innerHTML = "Status: Critical / Dangerous"; adviceText.innerHTML = "More than half your income goes to debt. You should consider debt reduction strategies before applying for new loans."; } }

Understanding Your Debt-to-Income (DTI) Ratio

The Debt-to-Income (DTI) ratio is a key financial metric used by lenders, particularly mortgage providers, to determine your ability to manage monthly payments and repay borrowed money. It compares your total monthly debt obligations to your gross monthly income.

How is DTI Calculated?

The formula for calculating your DTI ratio is straightforward:

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

Note that "Gross Monthly Income" refers to your pay before taxes and other deductions. "Total Monthly Debt" includes recurring obligations like your mortgage/rent, car payments, student loans, and minimum credit card payments.

Realistic Example

Imagine the following financial profile:

• Gross Monthly Income: $6,000
• Monthly Rent: $1,500
• Car Loan: $400
• Credit Card Minimum: $100

In this case, total monthly debt is $2,000. Dividing $2,000 by $6,000 gives 0.333, or a 33.3% DTI ratio. This falls into the "Excellent" category for most lenders.

Why Does DTI Matter?

Lenders use this ratio to gauge risk. A high DTI suggests that an individual may have trouble making payments if their income drops or if they face unexpected expenses. For a conventional mortgage, most lenders prefer a DTI of 36% or lower, though some programs allow up to 43% or even 50% with compensating factors like a high credit score or significant cash reserves.

Tips to Improve Your DTI Ratio

1. Increase Monthly Payments: Pay more than the minimum on your credit cards to reduce the principal balance faster.
2. Avoid New Debt: Postpone large purchases that require financing (like a new car) if you are planning to apply for a mortgage soon.
3. Increase Income: If possible, take on extra shifts or freelance work to boost your gross monthly income.
4. Debt Consolidation: Sometimes consolidating high-interest debt into a lower-interest loan can reduce your total monthly obligation.