📖 Overview
Use this tool to evaluate borrowing readiness before submitting applications.
⚙️ How It Works
This calculates debt-to-income ratio as monthly debt payments divided by gross monthly income, shown as a percent.
The Formula
DTI = (Monthly Debt Payments ÷ Gross Monthly Income) × 100
| DTI | Debt-to-Income ratio, as a percentage |
| Debt | Total recurring monthly debt obligations (loans, credit cards, lease) |
| Income | Gross monthly income before taxes |
💡Most conventional mortgage lenders require a DTI below 43%. FHA loans allow up to 50% in some cases. Reducing your DTI by even 5% can meaningfully improve your loan terms.
Quick Reference
| DTI Range | Lender View | What It Means |
|---|---|---|
| < 20% | ✅ Excellent | Minimal debt burden; strong creditworthiness |
| 20 – 35% | ✅ Good | Manageable debt; most loans will approve |
| 36 – 43% | ⚠️ Caution | Near the limit for many mortgage lenders |
| > 43% | ❌ High | Loan denial likely; focus on debt reduction |
Practical Tips
💡 Lower debt payments improve underwriting outcomes.
💡 Use gross income consistently when comparing lenders.
💡 Track this ratio before applying for major credit.
Frequently Asked Questions
❓ Why do lenders care about DTI?
It indicates repayment capacity relative to current obligations.
❓ Should income be net or gross?
Most lenders benchmark using gross income.