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Debt-to-Income (DTI) Calculator

Income
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Before taxes.
Housing Debt
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Other Debts (Monthly)
$

Enter income and debts to check loan eligibility.

DTI Health Check
< 36% Excellent
36% - 43% Good
43% - 50% Risky
> 50% Critical
Note: Lenders also look at credit score, savings, and employment history. DTI is just one piece of the puzzle.
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DTI Resources:

Understanding Debt-to-Income (DTI) Ratio

The Debt-to-Income (DTI) ratio is one of the most critical metrics used by lenders to assess your creditworthiness. Simply put, it tells the bank what percentage of your gross monthly income goes towards paying debts.

Think of it as a "Financial Health Thermometer." A low DTI ratio signals that you have a healthy balance between your income and debt, implying you can comfortably afford new payments. A high DTI suggests you are "over-leveraged" and might struggle if you take on more debt.

Why Lenders Care

Lenders want to get paid back. Historical data shows that borrowers with higher DTI ratios are statistically more likely to default on their loans. By enforcing DTI limits (like the common 43% rule for Qualified Mortgages), banks protect themselves and ensure borrowers don't take on more than they can chew.

The DTI Formula

The math is surprisingly simple:

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

Included
  • Mortgage / Rent
  • Car Loans
  • Student Loans
  • Minimum Credit Card Payments
  • Alimony / Child Support
Excluded
  • Groceries / Food
  • Utilities (Water, Electric)
  • Phone Bills
  • Insurance Premiums
  • Entertainment / Netflix

Trusted Financial Resources

Verify DTI guidelines directly from authoritative sources:

Front-End vs. Back-End Ratio

Front-End Ratio (Housing)

This only counts your housing-related expenses divided by income.

  • Mortgage Principal & Interest
  • Property Taxes
  • Homeowners Insurance
  • HOA Fees

Ideal Target: < 28%

Back-End Ratio (Total)

This counts EVERYTHING. Housing plus all consumer debts.

  • All Front-End items
  • Credit Cards
  • Car Loans
  • Student Loans

Ideal Target: < 36% (Max 43%)

Real-Life Scenarios: Approved vs. Rejected

Profile: John earns $5,000/mo. He has no debt ($0). He wants to buy a luxury condo with a $2,300/mo payment.

Calculation: $2,300 / $5,000 = 46% DTI.

Outcome: Rejected. Even though John has no other debt, his Front-End ratio is too high. Lenders worry that after taxes and housing, he won't have enough left for food and utilities.

Profile: Sarah earns $8,000/mo. She wants a modest home ($1,500/mo). But she has a $600 car payment and $500 student loans.

Calculation: ($1,500 + $600 + $500) / $8,000 = $2,600 / $8,000 = 32.5% DTI.

Outcome: Approved. Even with multiple debts, her high income keeps her ratio in the healthy "Green Zone" (under 36%). Lenders view her as a safe bet.

Profile: Mike earns $4,000/mo and has $2,000/mo in debts (50% DTI). He cannot get a loan. His father, earning $6,000/mo with $0 debt, co-signs.

New Calculation: Total Debt ($2,000) / Total Income ($10,000) = 20% DTI.

Outcome: Approved. Adding a low-debt co-borrower drastically dilutes the DTI ratio, unlocking approval.

Strategies to Lower Your DTI

Aggressive Paydown

Focus on debts with high monthly payments but low balances. Paying off a $500 balance that has a $50 minimum payment frees up $50/mo in DTI capacity instantly.

Increase Income

Lenders look at Gross Annual Income. Getting a raise, a guaranteed bonus, or documenting substantial side-gig income (usually 2 years tax returns required) increases the denominator, lowering the ratio.

Frequently Asked Questions

Generally, no. Most conventional loans cap at 43% or 45%. However, FHA loans (government-backed) sometimes allow up to 50% or even 57% with "compensating factors" like a high credit score or significant cash reserves.

No directly. Credit bureaus do not know your income, so they cannot calculate DTI. However, high debt usually means high "Credit Utilization," which does hurt your score.

Yes. Lenders know you will have to pay eventually. If the payment is $0 on your credit report, FHA guidelines typically require lenders to estimate 0.5% or 1% of the loan balance as the monthly payment for DTI purposes.

If you are applying for a mortgage, your current rent disappears (replaced by the new mortgage), so it doesn't count. But if you are applying for a car loan or personal loan, your rent IS considered a major monthly obligation.

If you pay it, it counts as Debt. If you receive it, it counts as Income (provided it is stable and likely to continue for 3+ years).

Legal Disclaimer: Ratios are based on general lending guidelines. Individual banks may have stricter or looser requirements. Always consult a licensed loan officer.