Debt-to-Income Ratio Calculator
Calculate your DTI to see if you qualify for a mortgage or loan.
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Your DTI Ratio
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What is Debt-to-Income (DTI) Ratio?
Your Debt-to-Income (DTI) ratio is one of the most critical metrics lenders use to assess your ability to repay borrowed money. It compares your total monthly debt payments to your gross monthly income (income before taxes). Expressed as a percentage, a lower DTI indicates that you have a good balance between debt and income.
Why DTI Matters for Mortgages
When applying for a mortgage, lenders want to ensure you aren't overextended. Most conventional loans require a DTI of 43% or lower, although some FHA loans may accept higher ratios with compensating factors. A DTI under 36% is generally considered excellent.
Calculation Example:
If you earn $60,000 annually ($5,000/month) and have total monthly debt payments of $2,000 (including your future mortgage, car loan, and credit cards):
$2,000 รท $5,000 = 0.40 or 40% DTI.
If you earn $60,000 annually ($5,000/month) and have total monthly debt payments of $2,000 (including your future mortgage, car loan, and credit cards):
$2,000 รท $5,000 = 0.40 or 40% DTI.
Front-End vs. Back-End Ratio
- Front-End Ratio: This only calculates your housing expenses (mortgage principal, interest, taxes, insurance, and HOA fees) divided by your gross income. Lenders typically prefer this to be under 28%.
- Back-End Ratio: This includes housing expenses plus all other recurring debt (credit cards, student loans, car payments). This is the "Total DTI" calculated above, which lenders prefer under 36-43%.
How to Lower Your DTI
If your ratio is too high, you have two primary options: reduce your monthly recurring debt or increase your gross income. Paying off a car loan or eliminating credit card balances can significantly lower your DTI, often helping you qualify for a larger mortgage amount or a better interest rate.