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Debt-to-Income (DTI) Ratio Calculator

Enter your monthly gross income and total monthly debt payments below to calculate your DTI ratio.

Include salary, bonuses, alimony, investment income, etc., before taxes.

Include rent/mortgage, car loans, student loans, credit card minimums, etc.

Understanding Your Debt-to-Income (DTI) Ratio

Your Debt-to-Income (DTI) ratio is a critical financial metric used by lenders to gauge your ability to manage monthly payments and repay debts. Essentially, it compares how much you owe each month to how much you earn.

A lower DTI ratio shows lenders that you have a good balance between debt and income, contrasting with a higher DTI ratio, which can signal that you have too much debt for the amount of money you earn.

How Is DTI Calculated?

The formula used by our calculator is straightforward. It divides your total recurring monthly debt payments by your gross monthly income (your income before taxes and deductions). The result is multiplied by 100 to get a percentage.

The Formula: (Total Monthly Debt Payments ÷ Gross Monthly Income) x 100 = DTI Ratio %

A Realistic Example:

• Gross Monthly Income: Let's say you earn $6,000 per month before taxes.
• Monthly Debt: You pay $1,500 for rent/mortgage, $400 for a car loan, and $200 in student loans and credit card minimums. Your total monthly debt is $2,100.
• Calculation: ($2,100 ÷ $6,000) = 0.35.
• Result: 0.35 x 100 = 35% DTI Ratio.

What Do the Numbers Mean?

Lenders have different standards, but general guidelines exist, particularly regarding mortgage lending:

• 35% or less: Generally considered ideal. You likely have disposable income and are viewed as a low-risk borrower.
• 36% to 43%: This range is often acceptable for most loans. The 43% mark is significant because, generally, it's the highest DTI ratio a borrower can have to get a "Qualified Mortgage."
• 44% to 50%: You are entering a high-risk zone. Lenders may require additional "compensating factors" like substantial cash reserves to approve a loan.
• Over 50%: Your borrowing options are severely limited. Focus should shift aggressively toward debt reduction.

What to Include in "Monthly Debt Payments"

When using the calculator, ensure you include only recurring minimum debt obligations. Do not include living expenses like groceries, utilities, or entertainment.

Include: Rent or mortgage payments (including insurance/taxes), car loans, student loans, personal loans, and minimum credit card payments.

Do Not Include: Utility bills, phone bills, food costs, or car insurance (unless it's bundled into your car payment).