Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Debt-to-income divides the monthly payments you owe by your gross monthly income, and lenders use it to judge how much more you can take on. With $1,850 of debt payments on $7,500 of income, the ratio is about 24.7 percent, and $5,650 of income is left before living costs. Lenders' limits vary by loan type and by lender, so a ratio that qualifies for one loan may not for another.
Before you rely on it
What to check
Include every recurring obligation the lender counts, such as car loans, student loans, credit card minimums and the proposed housing payment.
The common error
Where people go wrong with debt-to-income calculator
Treating a ratio that qualifies as one you can live with. The ratio uses gross income, and taxes and living costs come out of what is left.
Sensitivity evidence
How gross monthly income changes the debt-to-income ratio
| Gross monthly income | Debt-to-income ratio | Income after listed debt |
|---|---|---|
| $6,000 | 30.8% | $4,150 |
| $6,750 | 27.4% | $4,900 |
| $7,500worked example | 24.7% | $5,650 |
| $8,250 | 22.4% | $6,400 |
| $9,000 | 20.6% | $7,150 |
Every input, tested
Which input moves the debt-to-income ratio most
| Input | Tested from | To | Debt-to-income ratio at each end | Swing |
|---|---|---|---|---|
| Monthly debt payments | $1,665 | $2,035 | 22.2% to 27.1% | 4.9% (20%) |
| Gross monthly income | $6,750 | $8,250 | 27.4% to 22.4% | 5.0% (20%) |
Two variables at once
Debt-to-income ratio by gross monthly income and monthly debt payments
| Gross monthly income \ Monthly debt payments | $1,480 | $1,850 | $2,220 |
|---|---|---|---|
| $6,000 | 24.7% | 30.8% | 37.0% |
| $6,750 | 21.9% | 27.4% | 32.9% |
| $7,500 | 19.7% | 24.7% | 29.6% |
| $8,250 | 17.9% | 22.4% | 26.9% |
| $9,000 | 16.4% | 20.6% | 24.7% |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Monthly debt payments | $1,850 |
| Gross monthly income | $7,500 |
| Debt-to-income ratio | 24.7% |
| Income after listed debt | $5,650 |
Where the inputs come from
Monthly debt payments are the required minimum payments on loans and cards, including your future housing payment when applying for a mortgage, but not utilities, groceries or insurance. Gross monthly income is pay before taxes, plus other reliable income such as alimony or documented side income. Lenders use their own definitions, so use the figures from the application. Include car loans, student loans, personal loans and child support you are ordered to pay.
When the result stops applying
DTI does not show what you can actually afford, since it ignores taxes, childcare, insurance and living costs, so a lender may approve more than is comfortable. Lenders vary in what they count as income and debt. Paying off a loan with a small balance and a high payment can improve the ratio more than paying down a large low-payment loan.
What to compare it with
Use the loan and home affordability calculators to see what payment you can carry, and the credit utilization page for the score side. The debt consolidation and payoff calculators show ways to lower payments. Compute DTI before you apply so you know what a lender will see.
People also ask
Frequently asked questions
What is a good debt-to-income ratio?
Under 36% is considered good, and many lenders will go higher for mortgages. Above 43% to 50% makes approval harder.
What is the difference between front-end and back-end DTI?
Front-end counts only housing costs against income, and back-end adds all other debt payments. Lenders look at both.
Does DTI affect my credit score?
No. Credit scores do not include income, so DTI is used by lenders in addition to your score when deciding on a loan.