Debt-to-Income Ratio Calculator
Calculate your debt-to-income (DTI) ratio to assess your financial health. Lenders use this metric to evaluate your ability to manage monthly payments and repay debts. Enter your gross monthly income and debt payments below.
How to Use This Calculator
Step 1: Enter your gross monthly income (your income before taxes and deductions).
Step 2: Enter your total monthly debt payments. This includes all recurring debt obligations such as mortgage/rent, car loans, credit card minimums, student loans, and personal loans.
Step 3: Review your DTI ratio and see how lenders would evaluate your financial profile. The color-coded scale shows where you stand relative to common lending thresholds.
Understanding DTI Ratio Thresholds
The debt-to-income ratio measures what percentage of your gross monthly income goes toward paying debts. Different thresholds indicate varying levels of financial health:
| DTI Range | Rating | Interpretation |
|---|---|---|
| 0-20% | Excellent | Very low debt burden, highly favorable for loan approval |
| 21-35% | Good | Manageable debt level, generally qualifies for most loans |
| 36-43% | Acceptable | Approaching limits for conventional mortgages |
| 44-50% | High | May face challenges with loan approval |
| >50% | Very High | Significant financial stress, limited borrowing options |
Why DTI Matters
Lenders consider DTI ratio alongside credit score when evaluating loan applications. For conventional mortgages, most lenders prefer a DTI of 43% or lower. FHA loans may accept DTI ratios up to 50% with compensating factors. A lower DTI generally results in better interest rates and loan terms.
Want to improve your DTI ratio? Focus on paying down existing debts or increasing your income. Even small improvements can make a difference in loan eligibility and interest rates.