Ontario Tax Rate Calculator 2017

Debt-to-Income (DTI) Ratio Calculator

Total income before taxes

Your DTI Ratio: 0%

function calculateDTIRatio() { var income = parseFloat(document.getElementById('grossIncome').value); var rent = parseFloat(document.getElementById('rentMortgage').value) || 0; var car = parseFloat(document.getElementById('carPayment').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 resultBox = document.getElementById('dti-result-box'); var ratioDisplay = document.getElementById('ratioDisplay'); var ratioAnalysis = document.getElementById('ratioAnalysis'); var ratioDescription = document.getElementById('ratioDescription'); if (!income || income <= 0) { alert("Please enter a valid gross monthly income."); return; } var totalMonthlyDebt = rent + car + student + credit + other; var dtiRatio = (totalMonthlyDebt / income) * 100; resultBox.style.display = "block"; ratioDisplay.innerHTML = dtiRatio.toFixed(2) + "%"; if (dtiRatio 35 && dtiRatio <= 43) { resultBox.style.backgroundColor = "#fff3cd"; ratioAnalysis.innerHTML = "Manageable DTI Ratio"; ratioAnalysis.style.color = "#856404"; ratioDescription.innerHTML = "You have a manageable level of debt, but some lenders may limit your mortgage options. 43% is often the maximum for Qualified Mortgages."; } else { resultBox.style.backgroundColor = "#f8d7da"; ratioAnalysis.innerHTML = "High DTI Ratio"; ratioAnalysis.style.color = "#721c24"; ratioDescription.innerHTML = "You may struggle to qualify for new loans. Consider paying down high-interest credit card debt or car loans to lower your ratio."; } }

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What is a Debt-to-Income (DTI) Ratio?

The Debt-to-Income (DTI) ratio is a crucial financial metric used by mortgage lenders, auto loan providers, and banks to determine your ability to manage monthly payments and repay debts. It compares your total fixed monthly debt obligations against your gross monthly income (your income before taxes and deductions).

How the DTI Ratio is Calculated

The formula for calculating your DTI ratio is straightforward:

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

A Realistic DTI Example

Let's look at a common scenario to see how this works in practice:

Expense / Income Item	Amount
Gross Monthly Income	$6,000
Rent/Mortgage	$1,800
Car Loan	$400
Credit Card Minimums	$200
Total Monthly Debt	$2,400

In this example, $2,400 divided by $6,000 equals 0.40, or a 40% DTI ratio.

Why Your DTI Ratio Matters

• Mortgage Approval: Most conventional mortgage lenders look for a DTI ratio of 36% or less, though some programs like FHA loans allow up to 43% or even higher in specific cases.
• Interest Rates: Lower DTI ratios often signal lower risk, which can help you secure more favorable interest rates on personal loans and credit cards.
• Financial Health: A high DTI ratio indicates that a significant portion of your income is already spoken for, leaving less room for savings, investments, or emergency expenses.

Tips to Improve Your DTI Ratio

1. Avoid New Debt: If you are planning to buy a home, avoid taking on new car loans or large credit card balances.
2. Increase Your Income: Side hustles or salary increases directly lower the ratio since the denominator of the equation grows.
3. Aggressive Debt Paydown: Focus on paying off the smallest loan balances entirely. This removes a monthly payment from the "Debt" side of the equation, improving the ratio faster than just paying down a large balance partially.