Simple Interest Rate Calculation Formula

Debt-to-Income (DTI) Ratio Calculator

1. Monthly Income

Pre-tax income from salary, bonuses, etc.

2. Monthly Debts

Total Monthly Debt

$0

Your DTI Ratio

0%

Understanding Your Debt-to-Income Ratio

Your Debt-to-Income (DTI) ratio is one of the most critical metrics lenders use to assess your ability to repay a loan. Unlike your credit score, which measures your repayment history, your DTI measures your repayment capacity relative to your current income.

Before applying for a mortgage, personal loan, or auto financing, calculating your DTI can give you a clear picture of your financial health and approval odds.

How DTI is Calculated

The formula for DTI is straightforward but requires accuracy regarding your monthly obligations. It is calculated as:

(Total Monthly Debt Payments ÷ Gross Monthly Income) × 100 = DTI %

Gross Monthly Income is your income before taxes and deductions. Monthly Debt Payments include rent/mortgage, minimum credit card payments, student loans, and car loans. It generally does not include utilities, groceries, or entertainment expenses.

What is a Good DTI Ratio?

Lenders have specific thresholds for DTI, particularly in the mortgage industry (e.g., Fannie Mae and Freddie Mac guidelines).

• 35% or less: Considered excellent. Lenders view you as a safe borrower with plenty of disposable income.
• 36% to 43%: The typical "manageable" range. You will likely qualify for loans, though you may not get the absolute best interest rates. The 43% mark is a specific limit for many "Qualified Mortgages."
• 44% to 49%: High risk. You may struggle to find approval for a conventional mortgage, though FHA loans sometimes allow ratios up to 50% or higher with compensating factors.
• 50% or higher: Lenders often view this as financial distress. Approval is difficult, and your focus should be on debt reduction.

Front-End vs. Back-End DTI

When applying for a mortgage, you may hear about two types of ratios:

1. Front-End Ratio: Only considers your projected housing expenses (mortgage principal, interest, taxes, insurance, and HOA fees) divided by income. Ideally, this should be under 28%.
2. Back-End Ratio: Considers housing expenses PLUS all other recurring debts (the calculation used in the tool above). Ideally, this should be under 36% (the "28/36 rule").

Example Scenario

Imagine you earn $6,000 per month before taxes.

• Rent: $1,500
• Car Loan: $400
• Student Loan: $300
• Credit Cards: $200
• Total Debt: $2,400

Your calculation would be: ($2,400 / $6,000) = 0.40, or a 40% DTI. This is within the approvable range for most mortgages but leaves room for improvement.

function calculateDTI() { // Get Income var incomeInput = document.getElementById('dti_gross_income'); var income = parseFloat(incomeInput.value); // Get Debts (default to 0 if empty) var rentInput = document.getElementById('dti_rent'); var rent = parseFloat(rentInput.value) || 0; var carsInput = document.getElementById('dti_cars'); var cars = parseFloat(carsInput.value) || 0; var cardsInput = document.getElementById('dti_cards'); var cards = parseFloat(cardsInput.value) || 0; var loansInput = document.getElementById('dti_loans'); var loans = parseFloat(loansInput.value) || 0; // Elements for display var resultContainer = document.getElementById('dti_result_container'); var debtDisplay = document.getElementById('dti_total_debt_display'); var ratioDisplay = document.getElementById('dti_ratio_display'); var statusBox = document.getElementById('dti_status_box'); // Validation if (!income || income <= 0) { alert("Please enter a valid Gross Monthly Income greater than zero."); return; } // Calculations var totalDebt = rent + cars + cards + loans; var dtiRatio = (totalDebt / income) * 100; // Rounding dtiRatio = Math.round(dtiRatio * 100) / 100; // Display Results resultContainer.style.display = 'block'; debtDisplay.innerText = "$" + totalDebt.toLocaleString('en-US', {minimumFractionDigits: 0, maximumFractionDigits: 2}); ratioDisplay.innerText = dtiRatio + "%"; // Status Logic var statusMessage = ""; var statusColor = ""; var statusBg = ""; if (dtiRatio 35 && dtiRatio 43 && dtiRatio <= 49) { statusMessage = "Status: High Risk. Approval may be difficult."; statusColor = "#742a2a"; // Dark Red statusBg = "#fed7d7"; // Light Red } else { statusMessage = "Status: Critical. Focus on paying down debt."; statusColor = "#fff"; statusBg = "#e53e3e"; // Red } statusBox.innerText = statusMessage; statusBox.style.color = statusColor; statusBox.style.backgroundColor = statusBg; // Scroll to result on mobile resultContainer.scrollIntoView({behavior: 'smooth', block: 'nearest'}); }