Debt-to-Income Ratio Calculator
Calculate your debt-to-income (DTI) ratio to understand your financial health and determine loan eligibility. Lenders use this metric to evaluate your ability to manage monthly payments.
Formula
DTI (%) = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100
Where:
- Total Monthly Debt Payments = Mortgage/Rent + Car Loan + Student Loan + Credit Card Minimums + Other Debts
- Gross Monthly Income = Pre-tax monthly income from all sources
- Front-End Ratio = (Housing Payment ÷ Gross Monthly Income) × 100 — measures housing cost burden alone
Example: Total debts = $1,850/month; Gross income = $5,000/month → DTI = (1,850 ÷ 5,000) × 100 = 37%
Assumptions & References
- Income is entered as gross (pre-tax) monthly income, consistent with standard lender practice.
- Only minimum required payments on revolving debts (e.g., credit cards) are included, not full balances.
- The 43% DTI threshold is the maximum generally allowed for a Qualified Mortgage (QM) under the Consumer Financial Protection Bureau (CFPB) rules.
- The front-end ratio (housing-only) should ideally be 28% or below per conventional lending guidelines (Fannie Mae / Freddie Mac).
- FHA loans may allow DTI up to 50% with compensating factors; VA loans have no hard DTI cap but use a residual income test.
- DTI does not account for living expenses, savings rate, or net worth — it is one of several factors lenders evaluate.
- References: CFPB — Debt-to-Income Ratio; Fannie Mae Selling Guide B3-6-02.