Debt Ratio Calculator – Calculate Your Debt Ratio
Calculate your debt-to-income ratio and see how lenders view it.
About the Debt-to-Income Ratio Calculator
What is the Debt-to-Income Ratio Calculator?
A debt-to-income calculator measures your monthly debt payments as a percentage of gross income, a key figure lenders use to approve loans.
Why use this calculator?
Keeping your DTI in a healthy range improves your chances of qualifying for a mortgage or loan at a good rate. It is also a useful personal budget gauge.
How to use it
- Enter your gross monthly income.
- Enter your housing payment.
- Enter all other monthly debt payments (cards, auto, student loans).
- See your DTI ratio and how lenders are likely to view it.
Formula
DTI = total monthly debt payments ÷ gross monthly income × 100.
Front-end DTI covers housing only; back-end DTI includes all debts. Lenders often prefer back-end DTI at or below 36% to 43%.
Frequently Asked Questions
What DTI do lenders require?
Many conventional loans prefer 36% or less, though some programs allow up to 43% or higher with compensating factors.
How can I lower my DTI?
Pay down debts, avoid new borrowing, and increase income. Paying off a small installment loan can quickly improve the ratio.
What is a credit utilization ratio?
It is the share of your available credit that you are using. Keep it below 30%, and ideally below 10%, to protect your credit score.
Will paying off a card hurt my score?
No. Paying down balances usually helps your score by lowering utilization. Closing the account, however, can reduce your available credit.
What is the minimum payment trap?
Minimum payments are set low, so most of the payment goes to interest and the balance lingers for years. Paying more than the minimum saves substantial interest.
Should I consolidate my debts?
Consolidation can lower your interest rate and simplify payments, but it only works if you stop adding new debt. Compare the new APR and any fees first.
What is included in a monthly mortgage payment?
Most payments combine principal, interest, property taxes and homeowners insurance (often called PITI). Some loans also include private mortgage insurance (PMI).
What is PMI and when can I drop it?
Private mortgage insurance is usually required when your down payment is under 20%. You can typically request removal once you reach 20% equity.
Fixed versus adjustable rate — which is better?
A fixed rate keeps the same interest rate for the whole term, giving predictable payments. An adjustable rate starts lower but can rise after the initial period.
How much house can I afford?
A common guideline is that housing costs stay below 28% of gross monthly income and total debt below 36%, though lenders and budgets vary.