Debt-to-Income Ratio Calculator
Calculate your DTI ratio to see if you qualify for a mortgage or loan. Lenders use the 28/36 rule: housing costs โค28%, total debt โค36% of gross income.
Monthly Income
Before taxes (salary, wages)
Bonuses, rental, side income
Monthly Debt Payments
Your DTI Analysis
Fair: Your DTI is manageable but leaves little room for emergencies. Consider reducing debt.
Income vs Debt Breakdown
Maximum Affordable Debt by DTI Target
You're currently $150/month over the 36% guideline. Pay down debt before taking on more.
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Frequently Asked Questions
What is debt-to-income ratio and how do I calculate it?
Debt-to-income (DTI) ratio is your total monthly debt payments divided by your gross monthly income, expressed as a percentage. For example, if you have $2,500 in monthly debt payments and $7,500 in monthly income, your DTI is 33% ($2,500 / $7,500 = 0.33). Lenders use this to determine if you can afford a loan.
What is a good debt-to-income ratio?
A good DTI ratio is 36% or lower. Excellent is below 28%, good is 28-36%, fair is 36-43%, and poor is above 43%. Most lenders prefer 36% or less, though FHA loans allow up to 43%. The lower your DTI, the better your chances of loan approval and favorable interest rates.
What is the 28/36 rule for debt-to-income ratio?
The 28/36 rule states that your housing costs should not exceed 28% of gross monthly income (front-end ratio), and your total debt payments should not exceed 36% (back-end ratio). For example, with $7,500 monthly income, housing should be below $2,100 and total debts below $2,700.
What debts are included in DTI ratio?
DTI includes all recurring monthly debt payments: mortgage or rent, car loans, student loans, credit card minimum payments, personal loans, and other installment debts. It does NOT include utilities, groceries, insurance premiums (except mortgage insurance), or other living expenses.
What is the maximum DTI ratio for a mortgage?
Maximum DTI for mortgages: Conventional loans typically allow 43-45%, FHA loans allow 43% (up to 50% with compensating factors), VA loans allow 41%, and USDA loans allow 41%. Some lenders may go higher with excellent credit and compensating factors.
How can I lower my debt-to-income ratio?
To lower DTI: 1) Pay off high-interest debt first, 2) Increase income through raises, side jobs, or bonuses, 3) Avoid taking on new debt, 4) Make extra payments on existing debt, 5) Consider debt consolidation, 6) Refinance high-interest loans to lower payments, 7) Ask for credit card limit increases without increasing spending.
Does DTI include rent or just mortgage?
DTI includes both rent and mortgage. If you're renting, your monthly rent payment is included. If you're applying for a mortgage, lenders use your proposed mortgage payment (including principal, interest, taxes, insurance, and HOA fees) in the DTI calculation, not your current rent.
What is front-end vs back-end DTI ratio?
Front-end DTI is housing costs only (mortgage, taxes, insurance, HOA) divided by income. Lenders prefer 28% or less. Back-end DTI is ALL debt payments (housing + car loans + student loans + credit cards, etc.) divided by income. Lenders prefer 36% or less. Back-end DTI is what's typically referred to as 'DTI ratio'.
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