Determine your borrowing power and financial health.
1. Monthly Income (Before Taxes)
2. Monthly Debt Payments
0%
Understanding Your Debt-to-Income Ratio
Your Debt-to-Income (DTI) ratio is a critical financial metric used by lenders to assess your ability to manage monthly payments and repay debts. It compares your total monthly debt obligations to your gross monthly income. A lower DTI ratio indicates a good balance between debt and income, while a higher ratio suggests you may be overleveraged.
Why is DTI Important for Mortgages and Loans?
When applying for a mortgage, refinancing, or personal loan, the DTI ratio is often just as important as your credit score. Lenders use it to determine the risk level of lending to you.
Standard Lending Limits: Most conventional mortgage lenders prefer a DTI ratio below 36%.
FHA Limits: FHA loans may allow for higher ratios, sometimes up to 50% with compensating factors.
Financial Health: Even if you aren't borrowing, tracking your DTI helps you understand how much of your income is committed to past expenses rather than future savings.
Interpreting Your Results
Our calculator categorizes your financial health into three zones:
35% or Less (Good): You have a manageable level of debt relative to your income. Lenders view you as a low-risk borrower.
36% to 49% (Manageable but Risky): You may qualify for loans, but terms might be less favorable. You should work on reducing debt before taking on new obligations.
50% or Higher (Critical): More than half your income goes to debt. Most lenders will decline new applications. Immediate debt reduction strategies are recommended.
Front-End vs. Back-End Ratio
This calculator determines your Back-End Ratio, which includes all monthly debts. Lenders also look at the Front-End Ratio, which only calculates housing costs against your income. Ideally, your housing costs alone should not exceed 28% of your gross monthly income.
function calculateDTI() {
// Get Income Values
var grossIncome = parseFloat(document.getElementById('grossIncome').value) || 0;
var otherIncome = parseFloat(document.getElementById('otherIncome').value) || 0;
var totalIncome = grossIncome + otherIncome;
// Get Debt Values
var housing = parseFloat(document.getElementById('housingCost').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 otherDebt = parseFloat(document.getElementById('otherDebt').value) || 0;
var totalDebt = housing + car + student + cards + otherDebt;
// Get Result Elements
var resultBox = document.getElementById('dtiResult');
var valElem = document.getElementById('dtiValue');
var statusElem = document.getElementById('dtiStatus');
var feedbackElem = document.getElementById('dtiFeedback');
// Validation
if (totalIncome <= 0) {
alert("Please enter a valid Gross Monthly Income greater than 0.");
resultBox.style.display = "none";
return;
}
// Calculation
var dtiRatio = (totalDebt / totalIncome) * 100;
var dtiFormatted = dtiRatio.toFixed(2);
// Display Logic
resultBox.style.display = "block";
valElem.innerHTML = dtiFormatted + "%";
// Remove old status classes
resultBox.classList.remove('status-good', 'status-warning', 'status-danger');
if (dtiRatio 35 && dtiRatio < 50) {
resultBox.classList.add('status-warning');
statusElem.innerHTML = "Status: Caution";
statusElem.style.color = "#f39c12";
feedbackElem.innerHTML = "Your DTI is getting high. While you may still qualify for some loans, lenders might see you as a moderate risk. Consider paying down debt.";
} else {
resultBox.classList.add('status-danger');
statusElem.innerHTML = "Status: Critical";
statusElem.style.color = "#c0392b";
feedbackElem.innerHTML = "Your debt payments consume more than half of your income. It is highly recommended to focus on debt repayment before taking on any new financial obligations.";
}
}