debt to income ratio – P1
Debt-to-Income Ratio:
What It Is & What Yours Means
The number lenders check before approving any loan — and how to make sure yours is good enough.
Calculate Your DTI Ratio
Enter your monthly figures below — takes 30 seconds.
What Is Debt-to-Income Ratio (DTI)?
Your debt-to-income ratio (DTI) is the percentage of your monthly gross income that goes toward paying debts. It’s one of the most important numbers lenders look at when you apply for a mortgage, car loan, or personal loan.
DTI doesn’t appear on your credit report — but it’s calculated by every lender during the application process. A high DTI signals financial strain, even if your credit score is excellent.
The DTI Formula
The calculation is straightforward:
Example
Say your monthly income is $6,000 and your monthly debt payments add up to $1,800 (mortgage $1,200 + car loan $400 + credit card minimum $200):
$1,800 ÷ $6,000 × 100 = 30% DTI
Most lenders would consider this acceptable for a new loan.
What counts as “debt” in the calculation?
Include all recurring monthly minimum payments: mortgage or rent, car loans, student loans, credit card minimums, personal loans, and child support/alimony. Do not include utilities, groceries, or insurance.
What Is a Good Debt-to-Income Ratio?
Lenders use these general thresholds — though requirements vary by loan type and lender:
| DTI Range | Rating | What Lenders Think |
|---|---|---|
| Below 20% | Excellent | Strong financial health. Best rates available. |
| 20% – 35% | Good | Manageable debt load. Most loans approved. |
| 36% – 43% | Fair | Borderline. Mortgage approval possible but rates may be higher. |
| 44% – 49% | High | Difficult to qualify. Few lenders will approve. |
| 50% or more | Critical | Most lenders will deny. Financial stress likely. |
The 43% rule: For qualified mortgages in the US, the maximum DTI is typically 43%. Some programs (like FHA loans) may allow up to 50% with strong compensating factors.
Front-End vs. Back-End DTI
Mortgage lenders often calculate DTI two ways:
Front-End DTI (Housing Ratio)
Only your housing costs (mortgage principal + interest + taxes + insurance) divided by gross income. Most lenders want this below 28%.
Back-End DTI (Total DTI)
All monthly debt payments divided by gross income. This is the number most people refer to as “DTI.” Lenders generally want this below 36–43%.
Is Your DTI Too High?
Learn the proven strategies lenders recommend for lowering your ratio before applying for a mortgage or loan.
See What Lenders Consider “Good” →