What Is My Debt-to-Income (DTI) Ratio?

A DTI ratio calculator helps you understand how much of your monthly income is dedicated to repaying debt.

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One of the most important factors lenders scrutinize while reviewing your mortgage application is your debt-to-income (DTI) ratio — your monthly debt payments divided by your gross monthly income. Lenders use your DTI ratio to determine whether you can afford to repay the amount you plan to borrow.

Generally speaking, borrowers with high DTI ratios are seen as riskier to mortgage lenders, since they have less financial wiggle room. Understanding DTI can give you a clearer idea of the loan types you may be eligible for and how to increase your approval odds.

How to use our debt-to-income ratio calculator

To calculate your DTI ratio using our debt-to-income calculator, you’ll need two pieces of information:

  • Your gross annual income. Enter your gross annual income, or the amount you earn before taxes and payroll deductions, for you and any co-borrowers. If you don’t know the number off the top of your head, you can check your W-2, pay stubs or most recent tax return. Once you enter your annual income, it’ll automatically calculate your gross monthly income and use that to determine your DTI ratio.
  • Your total monthly debt payments. The second part of the DTI formula is your monthly debt payments. This may include credit card, student loan and auto loan payments. If you’re unsure how much you pay toward debts each month, check your budget or bank account statements. You can itemize your monthly debts using our calculator — simply press the blue “+ Itemized Monthly Debt” button.

Once you enter this information, you’ll see your DTI ratio expressed as a percentage, such as 30% or 40%. You’ll also see your DTI ranked on a meter as “good,” “fair” or “high.” If your DTI is labeled as good or fair, you’ll likely have a better chance of qualifying for a mortgage than someone with a high DTI ratio.

Why use a debt-to-income calculator?

A debt-to-income calculator can help you:

  • Learn what loans you may qualify for: Calculating your DTI can help you figure out the loan type you might qualify for. To learn about the DTI requirements for different mortgage loans, jump to the DTI ratio requirements section.
  • Understand the interest rate you could get: If you have a high DTI ratio, you could still qualify for a home loan, but you may receive a higher mortgage rate in return.
  • Get an idea of your overall financial health: Your DTI ratio paints a picture of your general financial stability — if you have a lot of debt, it may be a sign to cut back or think about debt relief.
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Debt-to-income ratio example

Let’s say your gross monthly income (before taxes and deductions) is $6,000 and your monthly bills are as follows:

  • Auto loan: $300
  • Student loan: $200
  • Personal loan: $100
  • Other debts: $200

This means your total monthly debt payments are equal to $800. You can use this number and your gross monthly income ($6,000) to calculate your DTI ratio with the DTI formula below:

Monthly debt payments / monthly gross income = DTI ratio
($800 / $6,000) = 0.13

Your DTI ratio would be 13%. Remember, if you’re applying with a co-borrower, be sure to include their income and debts when calculating your DTI ratio.

Front-end ratio vs. back-end ratio

Mortgage lenders will usually look at two types of DTI ratios:

  • Front-end ratio: Your front-end ratio measures the percentage of your monthly income that would go toward housing-related expenses, including monthly mortgage payments, homeowners insurance premiums and property taxes.
  • Back-end ratio: This measures how much of your monthly income goes toward all of your debt obligations, including your new mortgage, credit card payments and other debts. However, tt doesn’t include living expenses, such as food and gas.
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What is a good debt-to-income ratio for a mortgage?

A “good” debt-to-income ratio is slightly subjective, since it depends on the type of financing you’re interested in. That said, most mortgage lenders look for a maximum DTI ratio between 41% and 45%. However, a 35% DTI ratio or lower is generally considered an ideal debt-to-income ratio and may result in better loan terms and rates.

DTI ratio requirements by loan type

Here are the DTI limits for some of the most common home loan types:

Loan typeMaximum DTI ratio
Conventional loans45%
FHA loans43%
VA loans41%
USDA loans41%

How to lower your DTI ratio: 5 tips

Here are some tips to get your DTI ratio in better shape if it doesn’t align with your preferred loan type:

  1. Increase your income. Raising your income can immediately reduce your DTI ratio, even if your debts remain the same. For example, if your monthly income is $5,000 and your debt payments are $2,500, your DTI ratio is 50%. If your income increases to $6,000 and your debts stay the same, your new DTI ratio is 41.7% (within the range for most standard loan types).
  2. Pay down your credit card debt. Reducing your credit card balances typically lowers your monthly debt payments, which, in turn, lowers your DTI ratio. Using the debt snowball or debt avalanche method, or applying for a 0% balance transfer credit card, could help you make a dent in your debt faster.
  3. Make a larger down payment. If you can afford to, putting more money down on your home purchase could help lower your monthly payments, which would help lower your DTI ratio.
  4. Avoid taking out new debt. It’s best to minimize or avoid new debt while you’re trying to get approved for a mortgage. Applying for new credit can also ding your credit score since it counts as a “hard inquiry.”
  5. Consolidate your debt. Consolidating your debt can be worth it, especially if it helps you lower your monthly payments or pay off the debt sooner.

Frequently asked questions

Your DTI ratio doesn’t directly impact your credit score. However, the amount of debt you owe impacts your credit utilization ratio, which makes up 30% of your credit score.

Your living expenses — including what you spend on groceries, utilities, child care and entertainment — generally aren’t included in debt-to-income ratio calculations.

Your rent payments generally won’t be included when a lender calculates your debt-to-income ratio for a mortgage.