Weighted Average Interest Rate Calculator Excel

Debt-to-Income (DTI) Ratio Calculator

Determine the percentage of your gross monthly income that goes towards debt payments.

Monthly Debt Obligations

Your DTI Ratio is:

0%

Total Monthly Debt: $0

function calculateDTI() { // 1. Retrieve Inputs var incomeInput = document.getElementById('dtiGrossIncome').value; var mortgageInput = document.getElementById('dtiMortgageRent').value; var autoInput = document.getElementById('dtiAutoLoans').value; var studentInput = document.getElementById('dtiStudentLoans').value; var cardsInput = document.getElementById('dtiCreditCards').value; var otherInput = document.getElementById('dtiOtherDebt').value; // 2. Parse inputs to floats, handling empty strings as 0 var grossIncome = parseFloat(incomeInput) || 0; var mortgage = parseFloat(mortgageInput) || 0; var autoLoans = parseFloat(autoInput) || 0; var studentLoans = parseFloat(studentInput) || 0; var creditCards = parseFloat(cardsInput) || 0; var otherDebt = parseFloat(otherInput) || 0; // 3. Validate Income (must be greater than 0 for division) if (grossIncome <= 0) { alert("Please enter a valid Monthly Gross Income greater than zero."); return; } // 4. Calculate Total Monthly Debt var totalMonthlyDebt = mortgage + autoLoans + studentLoans + creditCards + otherDebt; // 5. Calculate DTI Percentage var dtiRatioDecimal = totalMonthlyDebt / grossIncome; var dtiPercentage = dtiRatioDecimal * 100; // 6. Prepare Results Display var resultContainer = document.getElementById('dtiResult'); var percentageOutput = document.getElementById('dtiPercentageOutput'); var totalDebtOutput = document.getElementById('dtiTotalDebtOutput'); var interpretationBox = document.getElementById('dtiInterpretation'); // Format outputs percentageOutput.innerText = dtiPercentage.toFixed(1) + "%"; totalDebtOutput.innerText = "Total Monthly Debt: $" + totalMonthlyDebt.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,'); // Determine Interpretation based on general lending standards var interpretationText = ""; var interpretationColor = ""; var interpretationBg = ""; if (dtiPercentage 35 && dtiPercentage 43 && dtiPercentage <= 50) { interpretationText = "Concern: You may face difficulties qualifying for a mortgage or find higher interest rates."; interpretationBg = "#ffeeba"; interpretationColor = "#856404"; } else { interpretationText = "High Risk: Lenders may consider you overleveraged. Consider reducing debt before applying for significant new credit."; interpretationBg = "#f8d7da"; interpretationColor = "#721c24"; } interpretationBox.innerText = interpretationText; interpretationBox.style.backgroundColor = interpretationBg; interpretationBox.style.color = interpretationColor; // Show results container resultContainer.style.display = "block"; }

Understanding Your Debt-to-Income (DTI) Ratio

Your Debt-to-Income (DTI) ratio is one of the most critical metrics lenders use to assess your financial health and ability to repay borrowed money. It is a percentage that compares your total monthly debt payments to your monthly gross (pre-tax) income.

Unlike your credit score, which looks at your history of repayment, DTI looks at your current capacity to take on new debt. A lower ratio signals to lenders that you have a good balance between debt and income, making you a less risky borrower.

How DTI is Calculated

The DTI formula is relatively straightforward. It involves summing all your recurring monthly debt obligations and dividing that total by your gross monthly income.

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

Example Calculation:

Let's say your gross monthly income is $6,000.

• Mortgage/Rent: $1,500
• Car Loan: $400
• Student Loan: $300
• Credit Card Minimums: $200

Your total monthly debt is $1,500 + $400 + $300 + $200 = $2,400.

Your DTI calculation would be: ($2,400 / $6,000) = 0.40, or 40%.

What is considered "Recurring Debt"?

When calculating DTI, lenders generally include debts that will last for more than a few months. This includes:

• Rent or mortgage payments (including taxes and insurance)
• Auto loans or leases
• Student loans
• Minimum required credit card payments
• Personal loans
• Alimony or child support payments

It typically does not include monthly utilities, groceries, gas, insurance premiums (unless part of mortgage), or subscriptions, as these are considered living expenses rather than debt obligations.

Why Your DTI Ratio Matters

The specific DTI requirement varies by lender and loan type, but here are general benchmarks, particularly for mortgage lending (the 43% rule is a common standard for Qualified Mortgages):

• 35% or lower: Considered excellent. Lenders see you as financially stable with plenty of disposable income.
• 36% – 43%: Considered manageable. You will likely qualify for loans, though lenders might scrutinize your application more closely as you approach 43%.
• 44% – 50%: This is the "danger zone" for many conventional mortgages. You might still find lenders, but interest rates may be higher, or you may need significant reserves. FHA loans sometimes allow higher ratios.
• Over 50%: With more than half your pre-tax income going to debt, it is very difficult to qualify for significant new financing without a co-signer or specialized loan product.

How to Lower Your DTI Ratio

Since DTI is a ratio of two numbers, there are two primary ways to improve it:

1. Increase your income: Raising your gross monthly income through a promotion, a new job, or a side hustle will lower your DTI percentage, assuming your debt stays the same.
2. Decrease your debt: Paying off loans entirely or significantly reducing credit card balances to lower minimum payments will reduce the numerator in the equation, lowering your DTI.