Debt-to-Income Ratio Calculator
Calculate your debt-to-income (DTI) ratio, which is a key factor lenders use to determine your borrowing eligibility. Understanding your DTI helps you assess your financial health and improve your chances of loan approval.
Monthly Income
Before taxes and deductions
After taxes and deductions
Monthly Debt Payments
Mortgage, rent, HOA, etc.
Minimum payments only
Personal loans, etc.
DTI Results
Front-End DTI:
0.00%
Back-End DTI:
0.00%
DTI Rating:
N/A
Monthly Breakdown
Total Monthly Income:
$0.00
Housing Costs:
$0.00
Total Debt Payments:
$0.00
Remaining Income:
$0.00
Loan Eligibility
Mortgage Approval:
N/A
Auto Loan Approval:
N/A
Credit Card Approval:
N/A
Understanding Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is a percentage that shows how much of your monthly income goes toward debt payments. Lenders use this ratio to determine your borrowing risk and eligibility for loans. A lower DTI ratio indicates better financial health and increases your chances of loan approval.
Front-End vs Back-End DTI
Front-End DTI
- Housing costs only
- Mortgage principal + interest + taxes + insurance
- Lenders prefer 28% or less
- Used for mortgage qualification
Back-End DTI
- All debt payments
- Housing + credit cards + loans + other debt
- Lenders prefer 36% or less
- More comprehensive assessment
DTI Categories
- Excellent: Below 20%
- Good: 20-35%
- Fair: 35-43%
- Poor: Above 43%
What Counts as Debt
- Mortgage payments
- Credit card minimums
- Car loan payments
- Student loan payments
- Personal loan payments
DTI Requirements by Loan Type
| Loan Type | Front-End DTI | Back-End DTI | Notes |
|---|---|---|---|
| Conventional Mortgage | 28% | 36% | FHA allows up to 31%/43% |
| FHA Mortgage | 31% | 43% | More lenient for first-time buyers |
| VA Mortgage | 41% | 41% | No back-end limit for VA loans |
| Auto Loan | N/A | 36-43% | Varies by lender |
| Personal Loan | N/A | 35-43% | Higher for secured loans |
Strategies to Improve Your DTI
DTI Improvement Strategies
Increase Income
- Take on a side job
- Ask for a raise
- Sell unused items
- Rent out space
Reduce Debt Payments
- Pay down high-interest debt
- Refinance loans
- Consolidate debt
- Negotiate lower payments
Lower Housing Costs
- Refinance mortgage
- Find a roommate
- Downsize home
- Move to cheaper area
Timing Strategies
- Pay off debt before applying
- Time large purchases
- Delay major expenses
- Plan around bonuses
DTI Myths and Facts
DTI Facts:
- Lower DTI = better loan terms
- Lenders verify DTI carefully
- DTI affects interest rates
- Can be improved over time
DTI Myths:
- DTI is the only factor lenders consider
- You can't get loans with high DTI
- DTI can't be changed
- All lenders use same DTI limits
Key Takeaways for DTI
- DTI ratio shows what percentage of your income goes to debt payments
- Front-end DTI includes only housing costs, back-end includes all debt
- Lenders prefer DTI ratios of 36% or less for most loans
- Lower DTI ratios result in better loan terms and approval odds
- You can improve your DTI by increasing income or reducing debt
- DTI is just one factor lenders consider along with credit score and employment
- Monitor your DTI regularly to maintain good financial health
- Different loan types have different DTI requirements