Debt-to-Income (DTI) Ratio Calculator
Calculate your DTI ratio to see if you qualify for a mortgage or personal loan.
What is the Debt-to-Income (DTI) Ratio?
The Debt-to-Income (DTI) ratio is a personal financial measure that compares an individual's monthly debt payments to their monthly gross income. Lenders, especially mortgage lenders, use this percentage to determine your "ability to repay" and to assess your level of financial risk.
How to Calculate Your DTI Ratio
The formula for DTI is straightforward: add up all your monthly debt obligations and divide that total by your gross monthly income (your income before taxes and deductions are taken out). Multiply the result by 100 to get a percentage.
Monthly Gross Income: $5,000
Monthly Debts: $1,200 (Mortgage) + $300 (Car) + $100 (Credit Cards) = $1,600
DTI Calculation: ($1,600 / $5,000) x 100 = 32%
What is a Good DTI Ratio?
Generally, lenders look for the following benchmarks:
- 36% or Less: This is considered excellent. You have a manageable level of debt and are seen as a low-risk borrower.
- 37% to 43%: This is acceptable. Most conventional lenders will still consider you for a loan, though you may face stricter scrutiny.
- 44% to 50%: This is high. You may need specific loan programs (like FHA loans) to qualify, and you may pay higher interest rates.
- Over 50%: This is considered "debt-stressed." You will likely struggle to find traditional financing until you lower your debt or increase your income.
Types of DTI: Front-End vs. Back-End
Lenders often look at two different DTI figures:
Front-End Ratio: This looks strictly at your housing costs (mortgage, taxes, insurance) relative to your income. Lenders typically prefer this to be below 28%.
Back-End Ratio: This includes all monthly debt payments (housing + car loans + student loans + credit cards). This is the "Total DTI" that our calculator computes above. Lenders typically look for this to be below 36% to 43%.