Debt-to-Income Ratio Calculator

Understanding Debt-to-Income Ratio

Your debt-to-income (DTI) ratio is a key financial metric that compares your monthly debt payments to your gross monthly income. Lenders use this ratio to assess your ability to manage monthly payments and repay borrowed money.

Why DTI Matters

• Mortgage Approval: Most lenders prefer DTI below 43% for mortgage qualification
• Credit Applications: Lower ratios improve chances of loan approval
• Interest Rates: Better ratios may qualify you for lower interest rates
• Financial Health: Indicates your overall financial stability

How to Improve Your DTI

• Pay down existing debt, starting with high-interest accounts
• Avoid taking on new debt
• Increase your income through raises, side jobs, or career changes
• Consider debt consolidation to lower monthly payments
• Make extra payments on loans when possible

What Counts as Debt?

Include these recurring monthly payments:

• Mortgage or rent payments
• Car loan payments
• Student loan payments
• Credit card minimum payments
• Personal loan payments
• Alimony or child support

Note: This calculator provides estimates for educational purposes. Consult with a financial advisor for personalized advice based on your specific situation.