Debt-to-Income (DTI) Ratio Calculator Assess your borrowing power — the key metric lenders use to approve mortgages, auto...
Debt-to-Income (DTI) Ratio Calculator
Assess your borrowing power — the key metric lenders use to approve mortgages, auto loans, and personal credit.
The Debt-to-Income (DTI) Ratio compares your total monthly debt payments to your gross (pre-tax) monthly income.
Formula: $$\text{DTI} = \frac{\text{Total Monthly Debt Payments}}{\text{Gross Monthly Income}}$$
Two Types:
- Front-End DTI: Housing costs only (mortgage/rent + taxes + insurance + PMI)
- Back-End DTI: All debt — housing + credit cards, auto, student, personal loans, alimony
Example: $6,000 income, $2,180 housing, $1,100 other debt → DTI = ($2,180 + $1,100) / $6,000 = **54.7%** → likely loan denial.
Lenders use DTI to assess repayment capacity:
| Loan Type | Ideal DTI | Max DTI (with conditions) |
|---|---|---|
| Conventional Mortgage | ≤ 36% | ≤ 45% (strong credit/20% down) |
| FHA Loan | ≤ 43% | ≤ 50% (with compensating factors) |
| VA Loan | ≤ 41% | Flexible (residual income test may override) |
| Auto Loan | ≤ 35% | ≤ 50% (higher rates/shorter terms) |
⚠️ DTI > 50% = high risk of default — most lenders deny applications outright.
Note: DTI ≠ credit utilization. DTI uses *income*; utilization uses *credit limit*.
✅ **Pay down debt** — focus on high-interest, low-balance accounts first (debt snowball) or highest interest (avalanche).
✅ **Increase income** — side gigs, overtime, raise request — even $500/mo cuts DTI by 8% at $6K income.
✅ **Refinance** — consolidate high-interest debt into lower-rate personal loan or 0% balance transfer card.
✅ **Delay large purchases** — avoid new car loans before mortgage application.
❌ **Avoid these mistakes**:
- Applying for new credit before mortgage close (triggers hard inquiries + new payments)
- Changing jobs (especially to commission-based income)
- Co-signing loans for others
➡️ Front-End DTI
For mortgage pre-approval: Enter housing costs (PITI = Principal, Interest, Taxes, Insurance).
➡️ Back-End DTI
For full financial health check: Enter *all* monthly debt obligations.
Select your loan type to see the lender’s DTI threshold.
Use “Max Housing” and “Max Total Debt” to see how much you can afford.
Note: Use *gross* income (before taxes), not take-home pay.