Debt-to-Income Calculator
Calculate your DTI ratio to determine your ability to manage monthly payments and repay debts.
- Gross Monthly Income $0
- Housing Expenses $0
- Total Monthly Debt $0
- Front-End Ratio (Housing) 0%
- Back-End Ratio (Total) 0%
What is Debt-to-Income Ratio?
Your debt-to-income (DTI) ratio is the percentage of your gross monthly income that goes to paying your monthly debt payments. It is a key indicator that lenders use to measure your ability to manage payments and repay what you borrow. A low DTI ratio demonstrates a good balance between debt and income.
Generally, 43% is the highest DTI ratio a borrower can have and still get qualified for a mortgage. Ideally, lenders prefer a debt-to-income ratio lower than 36%, with no more than 28% of that debt going towards servicing a mortgage or rent payment.
Front-End vs. Back-End Ratios
Lenders look at two types of DTI ratios:
- Front-End Ratio (Housing Ratio): This shows what percentage of your income would go toward housing costs.
- Back-End Ratio: This shows what percentage of your income covers all monthly debt obligations.
How to Lower Your DTI
Improving your DTI ratio can help you qualify for better loan terms:
- Pay Down Debt: Focus on paying off small balances or high-interest credit cards.
- Increase Income: Taking on a side job or negotiating a raise.
- Refinance: Extending the term of a loan can lower monthly payments.