Debt-to-Income (DTI) Ratio Calculator
Understand one of the key metrics lenders use to determine your borrowing risk.
Your Debt-to-Income Ratio is
30.0%
This is a healthy DTI ratio. Lenders generally see this as favorable, indicating you have a good balance between debt and income.
How to Use the DTI Ratio Calculator
- Enter Your Total Monthly Debt: Add up all your recurring monthly debt payments, including rent/mortgage, car loans, student loans, and minimum credit card payments.
- Enter Your Gross Monthly Income: Input your total income for one month before any taxes or deductions are taken out.
- Click "Calculate": Instantly see your DTI ratio and an analysis of what it means for your financial health.
Example: If your total debt payments are $1,500 per month and your gross monthly income is $5,000, your DTI is 30% ($1,500 / $5,000). A DTI under 36% is generally considered healthy by most lenders.
Frequently Asked Questions
What is a Debt-to-Income (DTI) ratio?
A DTI ratio is the percentage of your gross monthly income that goes towards paying your monthly debt payments. Lenders use it to measure your ability to manage monthly payments and repay debts.
Why is DTI important for loan approval?
DTI is a key metric lenders use to assess your risk as a borrower. A low DTI demonstrates a good balance between debt and income, making you a more attractive candidate for new credit like mortgages or auto loans.
What is a good DTI ratio?
Generally, a DTI of 36% or lower is considered good. A ratio between 37% and 43% is manageable for some lenders, but anything above 43% is often seen as a high risk, making it difficult to qualify for loans.
What debts should I include in the calculation?
Include all recurring monthly debt payments, such as rent or mortgage, car loans, student loans, personal loans, and minimum credit card payments. Do not include monthly expenses like groceries, utilities, or entertainment.
How can I lower my DTI ratio?
You can lower your DTI by either reducing your total monthly debt (by paying off loans or credit cards) or by increasing your gross monthly income (through a raise, side job, etc.).