Debt-to-Income Ratio Calculator

Lenders use a single number to quickly assess whether you can handle more debt. That number is your debt-to-income ratio, or DTI. It is the percentage of your gross monthly income that goes toward debt payments. A ratio below 36% is generally considered healthy. Most conventional mortgage lenders cap approval at 43% to 45% DTI. Above 50%, it becomes very difficult to qualify for new credit. Knowing your DTI before applying for a loan tells you where you stand and what you may need to pay down or pay off to qualify.

• Checking mortgage eligibility: Most conventional mortgage lenders require a back-end DTI at or below 43% and prefer under 36%. Enter your current debts plus the expected new mortgage payment to see whether you will likely qualify.
• Preparing to apply for a car loan: Before you shop for a car, enter your current debts and estimated car payment to see what your post-purchase DTI would be. If it comes out above 43%, a larger down payment or less expensive vehicle brings it back into range.
• Identifying which debts to pay off first: If your DTI is above 43%, list your debts by monthly payment size. Paying off one debt completely reduces the numerator more than making extra principal payments on multiple debts. Target the debt with the highest monthly payment that you can eliminate fastest.
• Tracking financial health over time: Run this calculation every few months as you pay down debt or your income changes. A declining DTI ratio shows clear progress toward financial flexibility and improved borrowing capacity.

• Using net income instead of gross: DTI is always computed on gross (pre-tax) income. Using your take-home pay produces a higher, inaccurate DTI. Use the gross income from your pay stub or tax return.
• Forgetting minimum credit card payments: Even if you pay your credit cards in full each month, lenders include the minimum payment in the DTI calculation because that is the required monthly obligation. Make sure to include all card minimums, not just balances you carry.
• Including expenses that are not debt: Groceries, utilities, phone bills, and subscriptions are not debt payments and should not be included in DTI. Only include obligations that appear on your credit report or are contractual loan/lease payments.
• Applying for a loan before reducing DTI: If your DTI is borderline, a hard inquiry and a new debt adds to the problem. If possible, pay down or pay off a debt first to lower your DTI, then apply. The difference of one or two percentage points can mean the difference between approval and denial.

1. 1Enter your gross monthly income: your pay before taxes and deductions.
2. 2Enter each monthly debt payment separately: rent or mortgage, car loans, student loans, credit card minimums, and other recurring debt.
3. 3The calculator adds all debt payments to get total monthly debt.
4. 4It divides total monthly debt by gross monthly income and multiplies by 100 to get the DTI percentage.
5. 5Your DTI is then classified against standard lender thresholds: under 36% (good), 36 to 43% (acceptable), above 43% (high).

• Pay off small debts to quickly lower DTI: A $100/month car loan paid off reduces your DTI by 2 percentage points on a $5,000/month income. Eliminating a payment completely is more effective for DTI than making extra payments on a large loan like a mortgage.
• Increase income to improve DTI without paying down debt: A raise, a part-time job, or documented freelance income increases the denominator and lowers your DTI. Some lenders accept 24 months of self-employment income if documented. More income is a valid path to DTI improvement.
• Do not open new credit before a major loan application: New credit cards and loans increase your minimum monthly obligations and can raise your DTI. Avoid new accounts for at least 6 months before applying for a mortgage or major loan.
• Ask lenders about exceptions: Some loan programs allow DTI above 43% with compensating factors: large down payment, significant cash reserves, high credit score, or stable long-term employment. Ask what compensating factors apply before assuming a high DTI disqualifies you.