Debt-to-Income Ratio Calculator
Calculate your DTI ratio to assess financial health and loan eligibility. Free and instant.
DTI Ratios
Frequently Asked Questions
What is debt-to-income (DTI) ratio?
DTI ratio is the percentage of your monthly gross income that goes toward paying debts. It's calculated by dividing total monthly debt payments (including housing) by gross monthly income, then multiplying by 100. Lenders use this to assess your ability to manage monthly payments.
What's the difference between front-end and back-end DTI?
Front-end DTI includes only housing costs (mortgage/rent, property taxes, insurance, HOA). Back-end DTI includes housing plus all other debts (credit cards, car loans, student loans, etc.). Most lenders focus on back-end DTI.
What's a good DTI ratio?
Generally: 36% or less is excellent, 37-43% is acceptable, 44-50% is risky, above 50% is very difficult to qualify. Most conventional lenders prefer 36% or less for back-end DTI. FHA loans may accept up to 43%.
How do lenders use DTI ratio?
Lenders use DTI to evaluate loan applications. A lower DTI shows you can comfortably manage payments. High DTI suggests financial stress and higher default risk. DTI is a key factor in loan approval and interest rates.
What debts are included in DTI?
Include all recurring monthly debt payments: mortgage/rent, credit card minimums, car loans, student loans, personal loans, alimony, child support, and any other monthly obligations. Don't include utilities, groceries, or insurance premiums.
How can I improve my DTI ratio?
To improve DTI: (1) Increase income, (2) Pay down debts to reduce monthly payments, (3) Avoid new debt, (4) Refinance high-rate debt to lower payments, (5) Pay off small debts completely to eliminate minimum payments.
Introduction
Your debt-to-income (DTI) ratio is one of the most important financial metrics lenders use to evaluate your creditworthiness. It measures what percentage of your monthly income goes toward debt payments, helping lenders assess your ability to manage additional debt.
This free DTI calculator helps you understand your financial health and loan eligibility. It calculates both front-end DTI (housing costs only) and back-end DTI (all debts), giving you a complete picture of your debt burden.
Whether you're applying for a mortgage, personal loan, or just want to assess your financial health, knowing your DTI ratio is essential for making informed financial decisions.
How to Use the Debt-to-Income Ratio Calculator
Follow these steps to calculate your DTI ratio:
- 1
Enter Monthly Income
Input your gross monthly income (before taxes). Include all income sources: salary, wages, bonuses, rental income, and any other regular income.
- 2
Enter Housing Costs
Enter your total monthly housing costs: mortgage/rent payment, property taxes, homeowners/renters insurance, HOA fees, and PMI if applicable.
- 3
Enter Other Monthly Debts
Add all other monthly debt payments: credit cards, car loans, student loans, personal loans, and any other recurring debt obligations.
- 4
Review Your DTI Ratios
See your front-end DTI (housing only) and back-end DTI (housing + all debts). Compare to lender guidelines to assess your loan eligibility.
Understanding DTI Ratio Guidelines
36% or Less (Excellent): Most lenders prefer this. Shows you can comfortably manage debt payments and have room for additional obligations.
37-43% (Acceptable): May qualify for loans but with stricter requirements. Some lenders may require higher credit scores or larger down payments.
44-50% (Risky): Limited loan options available. Higher interest rates likely. Consider improving DTI before applying for major loans.
Above 50% (Very Difficult): Extremely difficult to qualify for new loans. Focus on reducing debt before applying for additional credit.
Tips & Best Practices for Improving DTI
1. Pay Down Existing Debts
The fastest way to improve DTI is to reduce monthly debt payments. Pay off small debts completely or make extra payments to reduce balances and minimum payments.
2. Increase Your Income
Higher income automatically improves your DTI ratio. Consider asking for a raise, taking on a side hustle, or finding higher-paying opportunities.
3. Avoid New Debt
Don't take on new debt while trying to improve DTI. Every new monthly payment increases your DTI and makes it harder to qualify for loans.
4. Refinance High-Rate Debt
Refinance credit cards or loans to lower interest rates, which reduces monthly payments and improves DTI. Balance transfer cards or debt consolidation loans can help.
5. Pay Off Small Debts First
Eliminating small debts completely removes their minimum payments from your DTI calculation, providing immediate improvement.
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