How to Calculate Your Debt-to-Income Ratio, Step by Step

Debt-to-income ratio (DTI) is one of the first numbers a lender checks on a loan or mortgage application -- it compares your monthly debt payments to your monthly gross income. Here's exactly how to calculate it yourself.

The Formula

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

What Counts as "Debt Payments"

Worked Example

1. 1

   List every recurring debt payment

   Rent: $1,200. Car loan: $350. Student loan: $200. Credit card minimum: $75.

2. 2

   Add them together

   $1,200 + $350 + $200 + $75 = $1,825 total monthly debt.

3. 3

   Divide by gross monthly income

   At a $5,500 gross monthly income: $1,825 ÷ $5,500 = 0.3318.

4. 4

   Multiply by 100

   0.3318 × 100 = 33.2% DTI.

What Counts as a "Good" DTI

DTI Range	What It Generally Means
Below 36%	Generally considered healthy by most lenders
36% – 43%	Still often approvable, especially for mortgages, but with tighter scrutiny
Above 43%	Harder to qualify for many loan types without compensating factors

These are general lending-industry norms, not a hard legal rule -- the exact cutoff depends on the loan type and lender.

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Frequently Asked Questions

Does DTI use gross income or take-home (net) pay?

Gross income (before taxes and deductions) -- using net pay would understate your income and overstate your DTI relative to how lenders actually calculate it.

Do utility bills or groceries count toward DTI?

No -- DTI only counts debt obligations (loans, mortgages/rent, minimum credit card payments), not everyday living expenses like utilities, groceries, insurance premiums, or subscriptions, even though those are real recurring costs too.