Debt-to-income (DTI) ratio compares your monthly debt payments to your gross monthly income. Lenders use DTI to assess borrowing capacity, especially for mortgages and large loans.
How to use this calculator
- Enter your gross monthly income before taxes.
- Enter total monthly debt payments (mortgage, car loans, student loans, credit cards, etc.).
- Review your DTI percentage and input summary.
Formula
DTI = (Total monthly debt payments ÷ Gross monthly income) × 100. A lower DTI generally indicates more room in your budget for new debt.
Example
With $6,000 monthly income and $1,500 in debt payments, your DTI is 25%, which is within typical lender guidelines.
Frequently asked questions
- What DTI do mortgage lenders prefer?
- Many lenders prefer a total DTI of 36% or less, though some allow up to 43% or higher depending on credit score, down payment, and loan program.
- What debts are included in DTI?
- Include recurring monthly obligations such as mortgage or rent, auto loans, student loans, credit card minimum payments, and other installment debt.