The formula
How it works
Your debt-to-income ratio is the share of your monthly income that goes to debt payments. Lenders use it to decide how much you can borrow, so it is one of the most important numbers when applying for a mortgage or loan.
FAQ
What’s a good DTI ratio?
Lower is better. Many lenders like to see a total DTI at or below 36%, and often cap it around 43% for a mortgage. Below 36% signals you have comfortable room in your budget for a new loan.
What’s the difference between front-end and back-end DTI?
Front-end DTI counts only your housing payment against income; back-end DTI adds all your other debts too. Lenders usually focus on the back-end figure, since it reflects your whole debt load.
How can I lower my DTI ratio?
Paying down existing balances or increasing your income both shrink the ratio, and consolidating high monthly payments into a lower one can help too. Avoiding new debt before a big loan application is one of the fastest ways to keep DTI in check.
Does checking my DTI affect my credit score?
No. DTI is calculated from your income and debt payments, not pulled from a credit report, so working it out yourself has no effect on your credit score. Lenders calculate it separately when they review your application.
What counts as debt in a DTI calculation?
Recurring required payments count — mortgage or rent, car loans, student loans, minimum credit card payments, and personal loans. One-time or variable costs like groceries, utilities, and insurance premiums are normally left out.
How is DTI different from credit utilization?
DTI compares your monthly debt payments to your income, while credit utilization compares your credit card balances to your credit limits. Both matter to lenders, but they measure different things — cash flow versus how much available credit you are using.
Does self-employment income change how DTI is calculated?
Lenders typically use your net (after-expenses) income for self-employed borrowers rather than gross revenue, which often makes qualifying income lower than it appears. This calculator uses whatever gross monthly figure you enter, so adjust it to match how a lender would count it.
About the debt-to-income calculator
This calculator works out your debt-to-income ratio — the percentage of your gross monthly income that is already committed to debt payments. It is the number lenders look at first when deciding whether to approve a mortgage, car loan or credit card, because it shows how much of your income is spoken for. A lower ratio means more breathing room and a better chance of approval at a good rate.
How to use it
Enter your gross (before-tax) monthly income, your housing payment, and the total of your other monthly debt payments such as car loans, student loans and minimum credit card payments. The calculator shows your front-end ratio (housing only) and your back-end ratio (all debts). For example, on $6,000 a month with a $1,500 housing payment and $500 of other debt, the back-end DTI is 33%. Do not include everyday spending like groceries or utilities.
The formula
The ratio is total monthly debt divided by gross monthly income, as a percentage: . The front-end version uses only the housing payment on top, while the back-end version adds every other required debt payment. Because it uses gross income, it is comparable across people regardless of their tax situation, which is why lenders rely on it.
Where it is used
Mortgage lenders use DTI to decide how large a home loan you qualify for, and it is a key part of every affordability check. Banks apply it to personal and auto loans too, and financial advisers use it to judge whether someone is overstretched. Keeping an eye on your own DTI before you apply for credit helps you see how a new loan would fit — and whether paying down existing debt first would strengthen your application.