Debt-to-Income Ratio Calculator
Calculate your debt-to-income ratio to understand your financial health.
Monthly Income
Monthly Debt Payments
Your Debt-to-Income Ratio
Front-End Ratio (Housing Debt):
0%
Back-End Ratio (Total Debt):
0%
Lender’s Approval Threshold:
Good
Understanding Debt-to-Income (DTI) Ratio
What Is a Debt-to-Income Ratio?
The debt-to-income (DTI) ratio measures how much of your monthly income goes toward debt payments. Lenders use this to assess your ability to manage new debt.
How Is It Calculated?
There are two types of DTI ratios:
- Front-End Ratio: Housing debt (mortgage/rent) ÷ Gross monthly income
- Back-End Ratio: Total monthly debt payments ÷ Gross monthly income
Why Does It Matter?
Lenders prefer borrowers with lower DTI ratios because it indicates better financial stability:
| DTI Ratio | Approval Likelihood |
|---|---|
| Below 28% | Excellent (Low risk) |
| 28% – 36% | Good (Most lenders approve) |
| 37% – 43% | Moderate (May require stricter terms) |
| Above 43% | High risk (Difficult to get loans) |
How to Improve Your DTI Ratio
- Increase Income: Side gigs, raises, or passive income.
- Reduce Debt: Pay down credit cards or refinance loans.
- Avoid New Debt: Limit new credit applications.
Pro Tip: A DTI ratio below 36% is ideal for mortgage approvals.