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How to Use Our Debt-to-Income Ratio Calculator

3 min read

How to Use Our Debt-to-Income Ratio Calculator

Your debt-to-income ratio (DTI) is one of the most important numbers lenders look at when you apply for a mortgage, car loan, or credit card. Our DTI Calculator shows you where you stand.

What to Enter

  • Gross Monthly Income -- Your total pre-tax monthly income from all sources: salary, freelance income, rental income, and any other regular earnings.
  • Monthly Debt Payments -- The total of all your minimum monthly debt obligations: mortgage or rent, car payment, student loans, credit card minimums, personal loans, child support, or alimony.

Understanding Your DTI

The calculator divides your total monthly debts by your gross monthly income and expresses the result as a percentage.

DTI = Total Monthly Debts / Gross Monthly Income x 100

For example, if you earn $6,000/month and have $1,800 in monthly debt payments: DTI = 1,800 / 6,000 = 30%.

What Lenders Want to See

  • Under 28% (front-end, housing only): Preferred for mortgage qualification
  • Under 36%: Generally considered healthy
  • 36-43%: Acceptable for many lenders, but limits options
  • 43%: Maximum for most qualified mortgages
  • Over 50%: Significant financial stress; most lenders will decline

Two Types of DTI

Front-end ratio includes only housing costs (mortgage, taxes, insurance). Lenders prefer this under 28%.

Back-end ratio includes all debts. This is the number most commonly referenced and should stay under 36-43%.

Improving Your DTI

You can improve your DTI by either increasing income or reducing debt. Paying off a $300/month car loan drops your DTI by 5 percentage points on a $6,000 income -- potentially moving you from "borderline" to "approved."

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