Debt-to-Income Ratio Calculator

Understanding Your Debt-to-Income Ratio

Your debt-to-income ratio (DTI) is one of the most important numbers in your financial life — especially when you're applying for a mortgage, auto loan, or any other major credit product. DTI measures the percentage of your gross monthly income that goes toward paying debts. It tells lenders how much of your income is already committed and whether you can comfortably handle additional payments.

Lenders use DTI as a key qualifier because, unlike credit scores, it reflects your current financial obligations in relation to your earning power. Two people with identical credit scores may have vastly different DTI ratios, and the person with the lower ratio is generally considered a safer borrower.

Front-End vs. Back-End DTI: What's the Difference?

There are two types of DTI ratios, and lenders evaluate both:

• Front-end DTI (also called the housing ratio) measures only your housing-related costs — mortgage or rent, property taxes, homeowner's insurance, and HOA fees — as a percentage of your gross monthly income. Most conventional lenders prefer this to be below 28%.
• Back-end DTI (also called the total DTI) includes all recurring monthly debt obligations: housing costs plus car payments, student loans, credit card minimums, personal loans, alimony, and child support. This is the ratio most lenders focus on, and they generally prefer it to be below 36% for conventional loans, though FHA loans may allow up to 43% or even 50% with compensating factors.

What Counts as "Debt" in DTI?

When calculating DTI, lenders include minimum required monthly payments on all recurring obligations that appear on your credit report. This includes mortgage or rent payments, auto loans, student loans, credit card minimum payments, personal loans, alimony, and child support. It does not typically include utilities, groceries, insurance premiums (other than mortgage-related), phone bills, or subscriptions. The key distinction is contractual debt obligations versus living expenses.

DTI Ranges and What They Mean

Understanding where your DTI falls helps you gauge your borrowing power:

• Below 28%: Excellent. You're in great shape for virtually any loan product. Lenders see you as a low-risk borrower with plenty of financial breathing room.
• 28% to 36%: Good. Most conventional lenders are comfortable in this range. You qualify for competitive rates and favorable terms.
• 36% to 43%: Fair. You may still qualify for many loan products, including FHA-backed mortgages, but you might face higher rates or additional requirements. This range signals that a significant portion of your income is spoken for.
• 43% to 50%: High. Qualifying for new credit becomes more difficult. You're above the typical maximum for qualified mortgages (QM), though some lenders offer non-QM products in this range.
• Above 50%: Very high. More than half your income goes to debt. Lenders consider this a significant risk. Focus on debt reduction before applying for new credit.

How to Lower Your DTI Ratio

Improving your DTI comes down to two levers: reduce your debts or increase your income. On the debt side, focus on paying off or paying down existing balances — especially high-interest credit cards that may have relatively low balances but persistent minimum payments. Consolidating multiple debts into a single lower-payment loan can also improve your ratio. On the income side, a raise, second job, freelance work, or rental income all count toward the denominator and immediately improve your ratio.