Debt-to-Income (DTI) Ratio Calculator

Determine your DTI ratio to assess loan eligibility and manage debt burden.

Gross Monthly Income ($) Total income before taxes and deductions.

Monthly Housing Payment ($) Mortgage/rent, property tax, insurance.

Minimum Monthly Debt Payments ($) Car, credit card, student loans, etc.

Your Debt-to-Income Analysis

Total DTI Ratio (%)

Lender Recommendation

DTI Interpretation

Lenders use DTI to assess your ability to manage monthly payments and repay debts.

Understanding Your Debt-to-Income (DTI) Ratio

The **Debt-to-Income (DTI) Ratio Calculator** is a crucial tool for assessing your **financial health** and determining **mortgage qualification** or eligibility for other large loans. Your **DTI ratio** is the percentage of your gross monthly income that goes toward servicing your monthly debt payments. Lenders use the **DTI ratio** as a primary factor to assess your **debt burden** and ensure you can afford the new loan.

The DTI Ratio Formula

The **DTI ratio** is calculated by summing all recurring minimum monthly debt payments and dividing them by your **gross monthly income**:

$$\text{DTI} (\%) = \frac{\text{Total Monthly Debts}}{\text{Gross Monthly Income}} \times 100$$

The total monthly debts include minimum payments on car loans, credit cards, student loans, and your new/existing housing payment. A lower **DTI ratio** indicates better **financial health**.

DTI Ratios for Mortgage Qualification

The maximum acceptable **DTI ratio** varies by lender and loan type, but general guidelines are:

**Excellent:** $36\%$ or below. Generally offers the **best loan terms** and highest chance of **mortgage qualification**.
**Acceptable:** $37\% - 43\%$. Still viable for many loans, but may require a higher down payment.
**High:** $44\%$ or above. Indicates a high **debt burden** and may severely restrict loan approval.

Use the **DTI calculator** regularly to manage your **debt burden** before applying for new financing.

DTI Ratio FAQs

What is the most favorable DTI ratio for a home loan?

The most favorable **DTI ratio** for **mortgage qualification** is generally **$36\%$ or below**. Lenders view this range as indicating a low **debt burden** and strong **financial health**.

What counts as 'debt' in the DTI calculation?

Debt includes all required minimum monthly payments: housing (rent/mortgage, insurance, taxes), car loans, student loans, and minimum credit card payments. Only *recurring* mandatory payments are included in the **DTI ratio** calculation.

How does a high DTI ratio affect mortgage qualification?

A high **DTI ratio** (above $43\%$) indicates a high **debt burden** and significantly reduces the chance of **mortgage qualification**. Lenders assume a large percentage of your **gross monthly income** is already tied up, making it risky to take on more debt.