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Debt-to-Income (DTI) Calculator

Calculate your debt-to-income ratio in minutes and discover if you qualify for mortgages, auto loans, and other major financing

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Debt-to-Income (DTI) Calculator

Calculate your debt-to-income ratio and see if you qualify for major loans

Monthly Income

Housing Expenses

Debt Obligations

Results & Analysis

What is Gross Monthly Income?

This is your total monthly income before taxes and deductions. Include salary, bonuses, commissions, rental income, and any other regular income sources.

Gross Monthly Income

Annual income: $60,000.00

Income Sources to Include:

• Base salary or hourly wages
• Bonuses and commissions (if regular)
• Rental property income
• Investment dividends
• Social Security or pension income
• Child support or alimony (if you want to include)

What is Debt-to-Income Ratio?

Understanding the key metric lenders use to evaluate your loan applications

Your debt-to-income (DTI) ratio is a percentage that shows how much of your monthly gross income goes toward paying debts. Lenders use this number to assess your ability to manage monthly payments and repay borrowed money.

The Formula

DTI Ratio = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100

Example: If you earn $5,000/month and pay $2,000/month in debts, your DTI is 40% ($2,000 ÷ $5,000 × 100).

Two Types of DTI Ratios

Front-End Ratio

Measures only housing-related expenses (mortgage/rent, property taxes, insurance, HOA fees) as a percentage of income.

Ideal Range: Below 28%

Back-End Ratio

Includes all monthly debt obligations: housing, auto loans, student loans, credit cards, and other debts.

Ideal Range: Below 36%

Why Your DTI Matters for Loans

Loan Approval

Most lenders have maximum DTI requirements. Conventional mortgages typically require DTI below 36%, while FHA loans allow up to 43%.

Interest Rates

Lower DTI ratios often qualify for better interest rates, potentially saving you thousands over the life of a loan.

Loan Amount

Your DTI directly affects how much you can borrow. Lower ratios mean you may qualify for larger loan amounts.

Financial Health

Even beyond loans, DTI is an excellent indicator of your overall financial health and sustainability.

DTI Requirements by Loan Type

Loan Type	Max Front-End	Max Back-End	Notes
Conventional Mortgage	28%	36%	Most strict requirements
FHA Loan	31%	43%	First-time homebuyers
VA Loan	41%	41%	Military/veterans only
USDA Loan	29%	41%	Rural properties
Jumbo Loan	28%	36%	High-value properties

How to Improve Your DTI Ratio

Reduce Your Debt

• Pay off high-interest credit cards first
• Use the debt avalanche or snowball method
• Consider debt consolidation
• Avoid taking on new debt

Increase Your Income

• Negotiate a raise at your current job
• Start a side hustle or freelance work
• Invest in skills that command higher pay
• Consider passive income streams

Refinance Existing Debts

• Refinance high-rate student loans
• Consider mortgage refinancing
• Balance transfer to 0% APR cards
• Extend loan terms (if it lowers monthly payment)

Strategic Timing

• Pay down debts before applying for loans
• Avoid major purchases before loan applications
• Time your application after income increases
• Close or pay off accounts strategically

Frequently Asked Questions

What debts are included in DTI calculations?

Include all monthly debt obligations: mortgage/rent, car loans, student loans, credit card minimum payments, personal loans, alimony, child support, and any other recurring debt payments. Do not include utilities, groceries, insurance (except home/mortgage insurance), or other living expenses.

Is a 40% DTI ratio bad?

A 40% DTI is concerning and limits your loan options. Most conventional lenders prefer 36% or lower. At 40%, you may qualify for FHA or VA loans, but with less favorable terms. You should focus on reducing debt or increasing income before taking on new obligations.

Do lenders use gross or net income for DTI?

Lenders use gross monthly income (before taxes and deductions) to calculate DTI. This includes salary, bonuses, commissions, rental income, alimony, child support, and other regular income sources.

Will paying off debt improve my DTI immediately?

Yes! Paying off or paying down debt reduces your monthly obligations, which immediately improves your DTI ratio. Focus on debts with the highest monthly payments for the biggest DTI impact.

Can I get a mortgage with a high DTI?

It depends on the loan type. FHA loans allow DTI up to 43%, and some lenders may approve conventional loans up to 45% with strong compensating factors (high credit score, large down payment, cash reserves). However, higher DTI means higher risk and potentially higher interest rates.

Should I include student loans in forbearance or deferment?

Yes, in most cases. Even if your student loans are in forbearance or deferment, lenders typically still include them in DTI calculations using either the actual payment amount or 1% of the outstanding balance as an estimated payment.

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