Debt-to-Income Ratio Calculator
Calculate your debt-to-income ratio (DTI) used by lenders to evaluate mortgage and loan applications.
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Debt-to-Income Ratio
Debt-to-Income Ratio (DTI) is one of the most important numbers lenders look at when deciding whether to approve a loan. It measures how much of your monthly income goes toward paying debts.
Formula: DTI = (Total Monthly Debt Payments / Gross Monthly Income) × 100
Two Types of DTI:
- Front-end DTI: Only housing costs (mortgage/rent, insurance, taxes) divided by income.
- Back-end DTI: All monthly debt payments divided by income. This is the more commonly used measure.
DTI Rating Scale:
| DTI Range | Rating | Meaning |
|---|---|---|
| Below 20% | Excellent | Very low debt burden |
| 20% – 35% | Good | Comfortable range for most lenders |
| 36% – 43% | Acceptable | Maximum for most conventional mortgages |
| 43% – 50% | High | Difficult to get approved; FHA max is 43% |
| Above 50% | Very High | Most lenders will decline |
What Counts as Debt:
- Mortgage or rent payment
- Car loans
- Student loans
- Credit card minimum payments
- Personal loans
- Child support or alimony
- Any other recurring debt obligations
What Does NOT Count:
- Utilities (electric, water, internet)
- Insurance premiums (unless bundled with mortgage)
- Groceries, gas, subscriptions
- Taxes (unless property taxes bundled with mortgage)
Practical Example: Monthly income: $6,000 gross. Monthly debts: $1,200 mortgage + $400 car loan + $200 student loan + $100 credit card = $1,900. DTI = $1,900 / $6,000 = 31.7% — rated “Good.”
Tips:
- Lenders typically want back-end DTI below 43% for conventional mortgages.
- Paying off small debts before applying for a mortgage can significantly improve your DTI.
- DTI uses gross income (before taxes), not net (take-home) pay.
- A lower DTI may qualify you for better interest rates.
- Lenders look at DTI alongside credit score, down payment, and employment history.
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