The Ultimate Debt-to-Income (DTI) Ratio Calculator
Your Debt-to-Income (DTI) ratio is one of the most critical numbers lenders look at when you apply for a mortgage, auto loan, or personal line of credit. It represents the percentage of your gross monthly income that goes toward paying your recurring debt obligations.
A lower DTI demonstrates to lenders that you have a good balance between debt and income, making you a less risky borrower. Use our accurate DTI calculator below to determine where you stand financially before applying for new credit.
Calculate Your DTI Ratio
2. Your Monthly Recurring Debts
*Do not include utilities, groceries, or other variable living expenses.
Understanding Your DTI Ratio Results
The Debt-to-Income ratio is a simple calculation that divides your total monthly debt payments by your gross monthly income. The resulting percentage helps lenders measure your ability to manage monthly payments and repay debts.
What is included in the DTI calculation?
It's important to know what to include. Lenders are looking for recurring debt obligations. This typically includes:
- Rent or future mortgage payments (including principal, interest, taxes, and insurance).
- Car loan or lease payments.
- Minimum required credit card payments (not the total balance).
- Student loan payments.
- Alimony or child support payments.
What is NOT included: Utilities (gas, electric, water), phone bills, cable/internet, groceries, gas for your car, and health insurance premiums generally do not count toward your DTI for lending purposes.
The 43% Rule in Mortgage Lending
In the world of mortgages, the number 43 is crucial. Under the "Qualified Mortgage" rule in the United States, many lenders cannot issue a loan to a borrower whose DTI ratio exceeds 43% after taking on the new mortgage payment.
While some lenders—particularly FHA lenders or those who keep loans in their own portfolio—may approve higher ratios (sometimes up to 50% with compensating factors), keeping your DTI below 43% significantly increases your chances of approval.
How to Lower Your DTI Ratio
If the calculator above shows a high DTI, you have two main levers to pull to improve it:
- Increase your income: This could mean seeking a raise, finding a higher-paying job, or taking on a side hustle to increase your gross monthly intake.
- Decrease your debt: This is often the faster route. Pay off smaller loan balances completely to eliminate that monthly payment. Focus on paying down high-interest credit cards to lower your required minimum payments.
Example: If your gross income is $5,000 a month and your total debts are $2,500, your DTI is 50%. If you pay off an auto loan that costs $400 a month, your total debt drops to $2,100. Your new DTI would be $2,100 / $5,000 = 42%, moving you from a "high risk" category into an approvable range.