Debt-to-Income (DTI) Ratio Calculator
A financial metric for assessing borrower leverage and loan eligibility
The Debt-to-Income (DTI) Ratio is a personal finance measure that compares an individual's total monthly debt payments to their gross monthly income. Expressed as a percentage, the DTI ratio is the primary indicator used by lenders (including mortgage underwriters and auto loan providers) to gauge a borrower's ability to manage monthly payments and repay debts.
Calculator Tool
Financial Inputs
Note: Do not include living expenses like groceries or utilities; only contractual debt obligations.
Ratio Analysis
Calculation Components
To obtain an accurate DTI figure, it is crucial to properly categorize financial outflows and inflows.
Gross Monthly Income refers to earnings before taxes and other deductions. This includes base salary, overtime pay, bonuses, commissions, and investment dividends. Net income (take-home pay) is generally not used for DTI calculations in standard lending practices.
Monthly Debt Obligations include recurring minimum payments that typically appear on a credit report. Examples include:
- Housing costs (Mortgage principal, interest, taxes, insurance, or Rent).
- Auto loans and student loans.
- Credit card minimum payments.
- Alimony or child support payments.
Notably, variable living expenses such as food, utilities, and entertainment are excluded. For strategies on reducing these obligations, refer to the Debt Payoff Calculator or the Minimum Payment Calculator.
Standard DTI Ranges for Loan Approval
While lender criteria vary, the following ranges are widely accepted benchmarks for mortgage and personal loan underwriting.
| DTI Range | Classification | Implication |
|---|---|---|
| < 36% | Excellent | High probability of approval; access to lowest interest rates. Indicates disposable income availability. |
| 36% - 43% | Acceptable | Likely approval for qualified mortgages, though some lenders may require higher reserves. |
| > 43% | High Risk | Difficulty obtaining financing. Lenders perceive a high risk of default. Debt consolidation may be required to lower monthly outflows. |
Mathematical Formula
The Debt-to-Income ratio is calculated using a standard division formula, expressed as a percentage: