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Calculate your debt-to-income (DTI) ratio, the figure lenders use to assess your borrowing capacity.
33.3%
Healthy -- most lenders prefer 36% or below.
Debt-to-income (DTI) ratio is one of the most important figures lenders use to decide how much they'll lend you -- it measures what share of your gross monthly income already goes toward debt payments, unrelated to any single loan's own amortization math.
Enter your total monthly debt payments (mortgage/rent, car loans, student loans, minimum credit card payments, and any other recurring debt obligations) and your gross monthly income (before tax).
DTI Ratio = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100
Many mortgage lenders prefer a DTI at or below 36%, though some loan programs allow higher (up to 43-50% in some cases) -- specific thresholds vary significantly by lender and loan type, so treat these as general guidance, not a strict universal cutoff.
Lenders often look at two versions of this ratio. The front-end ratio counts only housing costs, such as mortgage payment, property tax, and insurance, against gross income. The back-end ratio counts housing plus all other recurring debts. This calculator computes a single ratio from whatever total you enter, so you can get either version by choosing what goes into the debt field. To see the back-end version, include the full housing payment along with car loans, student loans, and minimum card payments.
Suppose a household has a $1,500 rent payment, a $300 car payment, a $150 student loan payment, and $50 in minimum credit card payments, for $2,000 of monthly debt. If gross monthly income is $5,000, the ratio is 40%. Now imagine the household pays off the car loan. Debt falls to $1,700 and the ratio drops to 34%. This shows why paying off a smaller installment loan can noticeably improve DTI even if the balance was modest, because the ratio depends on payments, not balances.
Include monthly payments on loans and the minimum required on credit cards. Exclude routine living costs such as food, utilities, phone service, and insurance premiums unless they are part of a housing payment. Some obligations that lenders may count but people forget include child support, alimony, and payments on a co-signed loan. Check your credit report to see all reported debts.
DTI is one factor among many, alongside credit history, savings, down payment, and employment stability. A low ratio does not guarantee approval, and a high ratio does not always prevent it. Requirements vary between lenders and programs, so ask potential lenders for their specific guidelines. This tool is educational and is not a credit decision.
Recurring debt obligations like mortgage/rent, auto loans, student loans, and minimum credit card payments -- not everyday living expenses like groceries, utilities, or subscriptions.
It varies by lender and loan program, but 36% or below is commonly cited as a healthy target, while many programs cap qualification somewhere between 43-50% depending on other factors like credit score and down payment.
When you are applying for a mortgage, your current rent is usually replaced by the projected new housing payment. For other purposes, including rent gives a fuller picture of your obligations.
No. They are living expenses, not debt payments, so they are left out of the standard calculation.
Credit scores do not directly include income, so DTI is not part of the score. However, lenders review it separately when deciding whether to approve a loan.
Reference: Consumer Financial Protection Bureau