Debt-to-Income Ratio Calculator
Find the percentage of your gross monthly income that goes toward debt payments. Lenders use this ratio to evaluate loan and mortgage eligibility.
About this calculator
The debt-to-income (DTI) ratio measures how much of your gross monthly income is consumed by recurring debt obligations. The formula is: DTI = (monthlyDebt / monthlyIncome) × 100. For example, if you pay $1,500 in debts each month and earn $5,000 gross, your DTI is 30%. Lenders typically prefer a DTI below 36% for conventional mortgages, though FHA loans may allow up to 43%. A lower DTI signals stronger financial health and greater borrowing capacity. Tracking your DTI regularly helps you understand how new debt commitments—like a car loan or mortgage—would affect your overall financial picture before you apply.
How to use
Suppose your monthly debt payments are: mortgage $1,200, car loan $300, and student loan $200, totaling $1,700. Your monthly gross income is $5,500. Apply the formula: DTI = (1,700 / 5,500) × 100 = 30.9%. This means roughly 31 cents of every dollar you earn before taxes goes toward debt. Since this falls below the common 36% threshold, you are in a relatively healthy borrowing position and would likely qualify for most conventional loan products.
Frequently asked questions
What is a good debt-to-income ratio for getting a mortgage?
Most conventional mortgage lenders prefer a DTI at or below 36%, with no more than 28% of that going toward housing costs. FHA loans can accept DTIs up to 43%, and some lenders may go higher with compensating factors like a large down payment or excellent credit. The lower your DTI, the better your chances of approval and the more favorable the interest rate you are likely to receive. Aim for a DTI under 36% before applying for any major loan.
How do I lower my debt-to-income ratio quickly?
You can lower your DTI by either reducing your monthly debt payments or increasing your gross income—ideally both. Paying off smaller debts entirely removes their monthly obligation from the calculation immediately. Refinancing high-interest loans to longer terms can also reduce monthly payments, though you may pay more interest overall. Taking on a side income or negotiating a raise boosts the denominator of the ratio. Avoiding new debt applications in the months leading up to a major loan request is equally important.
Why do lenders use debt-to-income ratio instead of just credit score?
A credit score reflects your history of managing credit, while DTI measures your current cash flow capacity to handle new payments. A person can have an excellent credit score yet carry so much existing debt that they cannot realistically afford additional monthly obligations. Lenders use both metrics together to get a complete picture: the credit score tells them how reliably you have paid in the past, and the DTI tells them whether your budget can accommodate the new loan. Regulatory guidelines for qualified mortgages specifically require DTI assessment, making it a mandatory underwriting step.