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Debt to Income Ratio Calculator: Measure Your Financial Health
The Debt to Income (DTI) Ratio Calculator shows what share of your monthly gross income goes toward debt payments. Use it to understand lender thresholds, improve loan approval odds, and plan debt reduction or refinancing strategies.
1) What the Calculator Does
This tool calculates your DTI percentage by dividing total monthly debt payments by gross monthly income. Many lenders screen applicants using DTI bands (e.g., <36% often considered healthy), so this single number provides a quick read on borrowing capacity and repayment risk.
2) Inputs
| Input | Description |
|---|---|
| Monthly Gross Income | Total income before taxes/deductions (salary, wages, bonus, side income, support, etc.). |
| Monthly Debt Payments | Sum of recurring debt obligations: mortgage or rent, car loans, student loans, credit card minimums, personal loans, alimony/child support, etc. |
3) How It Works (Formula)
The calculator uses this formula:
DTI (%) = ( Total Monthly Debt Payments / Gross Monthly Income ) × 100
- Total Monthly Debt Payments (D): Your combined monthly payments on debt.
- Gross Monthly Income (I): Your monthly income before taxes/deductions.
Example: If your debts are $1,800 and your gross income is $6,000, then DTI = (1,800 / 6,000) × 100 = 30%.
4) Outputs
| Output | What It Means |
|---|---|
| DTI Percentage | Your debt load relative to income. Lower percentages usually indicate stronger borrowing capacity and better loan terms. |
| Typical Interpretation Bands | < 36%: Generally considered healthy; 36–43%: Borderline/acceptable for many loans; > 43%: Risky—may reduce approval odds or raise interest rates. |
5) Practical Use Cases
- Mortgage readiness: Check if your DTI meets common lender thresholds before applying.
- Refinancing decisions: Estimate if a refinance could reduce payments enough to improve DTI.
- Debt paydown planning: Target specific balances to drop your DTI into a better band.
- Budget tuning: Balance new obligations (auto loan, line of credit) against DTI impact.
- Rate negotiation: Use a lower DTI to qualify for more favorable loan terms.
6) FAQ
What is a “good” DTI ratio?
Many lenders consider <36% strong, 36–43% acceptable, and >43% higher risk. Exact cutoffs vary by lender, loan type, and your full credit profile.
Does DTI use gross or net income?
DTI is typically calculated using gross monthly income (before taxes and deductions), not take-home pay.
Do living expenses like utilities or groceries count as “debt”?
No. DTI focuses on debt obligations—recurring payments you owe to creditors (loans, credit cards, etc.). Day-to-day expenses are not included.
Is rent included in DTI if I don’t have a mortgage?
Yes. If you rent, your monthly rent payment is typically included in your debt total for DTI.
What’s the difference between front-end and back-end DTI?
Front-end DTI includes housing costs only (mortgage/rent + taxes/insurance if applicable). Back-end DTI includes all monthly debt obligations and is more commonly used for underwriting.
How can I lower my DTI quickly?
Pay down revolving balances (credit cards), avoid new debts, consider consolidating or refinancing at lower rates/longer terms, and increase income where possible.
