Debt-to-Income (DTI) Ratio Calculator
Determine your mortgage eligibility by calculating your front-end and back-end DTI ratios.
Front-End DTI Ratio:
0%
Back-End DTI Ratio:
0%
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, specifically mortgage lenders, use this ratio to measure your ability to manage monthly payments and repay debts.
Front-End vs. Back-End DTI
- Front-End Ratio: Also known as the household ratio, this calculates how much of your gross income goes toward housing expenses (mortgage principal, interest, taxes, and insurance). Lenders generally prefer this to be 28% or less.
- Back-End Ratio: This includes all your monthly debt obligations—mortgage, car loans, student loans, and credit card minimums. This is the most critical number for most lenders, who typically look for a back-end ratio of 36% to 43%.
What DTI Ratio do Lenders Look For?
While requirements vary by loan type, here are the general benchmarks:
- 36% or Less: Excellent. You have a healthy balance between debt and income and should qualify for most conventional loans.
- 37% – 43%: Adequate. You may still qualify for many loan products, including FHA loans, but may face stricter scrutiny.
- 44% – 50%: Marginal. You might need a higher credit score or significant cash reserves to qualify.
- Over 50%: High Risk. Most lenders will require you to pay down debt or increase income before approving a mortgage.
Example Calculation
If you earn $5,000 per month (gross) and your total monthly debts (including your new mortgage) equal $2,000, your back-end DTI ratio is 40% ($2,000 / $5,000). To improve this ratio, focus on paying off high-interest credit cards or car loans before applying for a home loan.