Debt-to-Income Ratio Calculator
Your debt-to-income (DTI) ratio is a critical financial metric that compares your monthly debt payments to your gross income. This calculator helps you determine your DTI ratio and understand what it means for your financial health and borrowing capacity.
Debt-to-Income Ratio Calculator
Calculate your debt-to-income ratio to assess your financial health and loan qualification prospects.
Monthly Gross Income
Enter your pre-tax monthly income from all sources.
Monthly Debt Payments
Enter the minimum required monthly payments for each debt.
Debt-to-Income Analysis
You're well within recommended DTI limits, indicating a healthy financial position.
Your debt load appears manageable relative to your income. This puts you in a favorable position for obtaining loans with good terms.
How to Use This Calculator
This calculator helps you make informed financial decisions by providing accurate estimates based on the information you provide. Follow these steps:
Enter Your Details
Fill in all required fields with your financial information.
Adjust Parameters
Use sliders and toggles to customize scenarios and assumptions.
View Results
Get instant calculations that update as you change inputs.
Compare Options
Try different scenarios to find the best financial solution.
Understanding Your Debt-to-Income Ratio
Your debt-to-income ratio (DTI) is one of the main factors lenders use to determine your borrowing capacity. It helps them assess whether you can comfortably take on additional debt based on your current income and existing financial obligations.
Why Your DTI Ratio Matters
- Loan Qualification: Most lenders look for a DTI of 43% or less for qualified mortgages
- Interest Rates: Lower DTI ratios may help you qualify for better interest rates
- Financial Health Indicator: Provides insight into your overall financial balance
- Early Warning System: Increasing DTI can signal potential financial stress
- Budgeting Tool: Helps you determine how much debt is appropriate for your income level
Types of DTI Ratios
There are two main types of DTI ratios that lenders consider:
- Front-End Ratio (Housing Ratio): The percentage of your income that goes toward housing costs, including mortgage/rent, property taxes, insurance, and HOA fees. The traditional guideline is 28% or less.
- Back-End Ratio (Total DTI): The percentage of your income that goes toward all debt payments, including housing, credit cards, auto loans, student loans, and other debts. Lenders typically prefer 36% or less, with 43% often being the maximum.
Improving Your DTI Ratio
If your DTI is higher than recommended, consider these strategies:
- Pay Down Debt: Focus on high-interest debt first to reduce total monthly payments
- Increase Income: Take on additional work, ask for a raise, or pursue career advancement
- Refinance Existing Debt: Consolidate or refinance to lower your monthly payments
- Avoid Taking on New Debt: Postpone new loans or credit until your ratio improves
- Extend Loan Terms: While this increases total interest paid, it can reduce monthly payments
DTI and Mortgage Qualification
Different mortgage programs have different DTI requirements:
- Conventional Loans: Typically require a DTI of 36% or less, but may go up to 45% with strong credit
- FHA Loans: May accept DTI ratios up to 43%, or higher with compensating factors
- VA Loans: Often allow higher DTI ratios, focusing instead on "residual income"
- Qualified Mortgages: Generally require a DTI ratio of 43% or less