Debt-to-Income Ratio Calculator
Monthly Income
Housing Costs
Other Monthly Debts
DTI Guidelines
- •Under 36% is considered healthy
- •43% is the maximum for most mortgages
- •Keep housing costs under 28% of income
- •Lower DTI means easier loan approval
Related Calculators
Understanding Debt-to-Income Ratio
What is DTI?
Debt-to-income ratio (DTI) is a personal finance measure that compares your monthly debt payments to your gross monthly income. Lenders use this ratio to evaluate your ability to manage monthly payments and repay borrowed money.
DTI = (Total Monthly Debt Payments / Gross Monthly Income) x 100
Two Types of DTI
Front-End Ratio
Housing costs only (mortgage/rent, property tax, insurance, HOA). Lenders typically want this under 28%.
Back-End Ratio
All monthly debt obligations including housing. This is the primary DTI lenders consider. Maximum is typically 43% for qualified mortgages.
DTI Ranges and What They Mean
| DTI Range | Rating | Loan Prospects |
|---|---|---|
| Under 20% | Excellent | Best rates and terms available |
| 20% - 35% | Good | Easily qualify for most loans |
| 36% - 43% | Fair | May qualify with good credit |
| 44% - 50% | Poor | Limited options, higher rates |
| Over 50% | Critical | Very difficult to qualify |
What Counts as Debt?
Included in DTI
- • Mortgage/rent payments
- • Car loans
- • Student loans
- • Credit card minimum payments
- • Personal loans
- • Child support/alimony
Not Included
- • Utilities (electric, water, gas)
- • Groceries and food
- • Health insurance premiums
- • Cell phone bills
- • Entertainment subscriptions
- • Income taxes
How to Improve Your DTI
- Pay down debt: Focus on reducing credit card and loan balances
- Increase income: Side jobs, raises, or additional work hours
- Avoid new debt: Do not take on new loans before a major application
- Refinance: Lower monthly payments through refinancing
- Extend loan terms: Longer terms mean lower monthly payments (but more interest)
Important Note
DTI is just one factor lenders consider. Credit score, employment history, down payment, and savings also play major roles in loan approval decisions. A high income with a high DTI may be viewed more favorably than a lower income with the same ratio.
Frequently Asked Questions
What is a good debt-to-income ratio?
A DTI under 36% is considered healthy by most lenders. The ideal breakdown is 28% or less for housing costs (front-end ratio) and 36% or less for all debts combined (back-end ratio). DTI between 36-43% may still qualify for mortgages but with less favorable terms. Above 43% makes most loan approvals difficult.
How do I calculate my debt-to-income ratio?
Divide your total monthly debt payments by your gross monthly income, then multiply by 100. For example, if your monthly debts total $2,000 and gross income is $6,000, your DTI is 33.3% ($2,000 / $6,000 x 100). Include mortgage/rent, car loans, student loans, credit card minimums, and other loan payments.
What debts are included in DTI calculation?
Include: mortgage/rent, car payments, student loans, credit card minimum payments, personal loans, child support, and alimony. Do NOT include: utilities, groceries, insurance premiums, phone bills, subscriptions, or income taxes. Lenders focus on recurring debt obligations, not living expenses.
How can I lower my DTI ratio?
You can lower DTI by: paying down existing debts (especially credit cards), increasing your income through raises or side jobs, avoiding new debt before major purchases, refinancing to lower monthly payments, or extending loan terms. For mortgages, a larger down payment also reduces your housing payment and improves DTI.