About the Debt-to-Income (DTI) Ratio
Your debt-to-income ratio is the single number lenders weigh most heavily after your credit score. It compares your monthly debt payments to your gross monthly income, and it decides not only whether you are approved for a mortgage but how much you can borrow.
The formula
DTI = (total monthly debt payments / gross monthly income) · 100Debt payments include mortgage or rent, car loans, student loans, credit card minimums, and any court-ordered support. Income is gross — before tax and deductions.
How to use this calculator
- 1Enter your Monthly Debt Payments ($). The field starts at
1500, which you can overwrite. - 2Enter your Gross Monthly Income ($). The field starts at
5000, which you can overwrite. - 3Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Monthly Debt Payments ($) | 1500 |
| Gross Monthly Income ($) | 5000 |
Result
Debt-to-Income Ratio: 30.00% (Healthy)
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
Lenders look at two ratios. The front-end ratio counts only housing costs and is generally capped near 28 percent. The back-end ratio counts all debt payments together, with 36 percent as the conventional preference, up to 43 percent for most qualified mortgages and as high as 50 percent for FHA loans with compensating factors.
DTI responds faster to reducing payments than to raising income, which makes it the more practical lever. Paying off a car loan removes its full monthly payment from the numerator immediately, whereas a raise has to be substantial and documented to move the denominator much. This is why clearing a small instalment loan before applying often increases borrowing capacity more than any other single action.
Things worth knowing
- DTI counts minimum required payments, not what you actually pay. Paying triple your card minimum does not improve the ratio; clearing the balance does.
- Utilities, insurance, groceries, and subscriptions are excluded — DTI covers debt obligations only.
- Do not open new credit while an application is in progress. Lenders re-pull your file before closing.
- Self-employed income is typically averaged over two years of tax returns, and it is net rather than gross revenue.
- A student loan in deferment may still count at an assumed payment percentage of the balance.
Frequently asked questions
What DTI do I need for a mortgage?+
Conventional lenders prefer 36 percent or below and generally accept up to 43 percent. FHA loans can stretch to 50 percent with strong compensating factors such as reserves or a high credit score.
What is the fastest way to lower my DTI?+
Pay off the smallest instalment loan entirely. Eliminating a 400 dollar car payment cuts your ratio immediately, whereas partially paying down a balance leaves the required minimum in place.
Does my rent count toward DTI?+
For a mortgage application, your prospective new housing payment replaces your current rent in the calculation. For other lending, current rent is often included.
Do utility bills or a phone plan count?+
No. DTI includes only debt obligations that appear on your credit report or as court-ordered payments. Living expenses are excluded, which is why a technically acceptable DTI can still leave a tight budget.