How to use the Debt-to-Income Ratio Calculator
- Enter your monthly housing payment: rent, or mortgage with tax and insurance.
- Enter the total of your other required monthly debt payments, such as car, student loans and credit card minimums.
- Enter your gross monthly income before tax.
- Read the back-end ratio, the front-end ratio and the general guide.
Formula used
Back-end DTI = (housing + other monthly debts) ÷ gross monthly income × 100. Front-end DTI = housing ÷ gross monthly income × 100.
Worked example
Here is the Debt-to-Income Ratio Calculator worked through with the example values shown above, so you can check each step by hand.
| Inputs | |
|---|---|
| Monthly housing payment (rent or mortgage) | $1,500 |
| Other monthly debt payments | $400 |
| Gross monthly income (before tax) | $6,000 |
| Result | |
| Back-end DTI (all debts) | 31.67% |
| Front-end DTI (housing only) | 25% |
| General guide | Within the range many lenders like to see. |
DTI at different incomes
The default housing cost and debts at different gross monthly incomes.
| Gross monthly income (before tax) | Back-end DTI (all debts) | General guide |
|---|---|---|
| $4,000 | 47.5% | High. Many lenders may decline or ask for more down payment. |
| $5,000 | 38% | Borderline. Some lenders may still approve. |
| $6,000 | 31.67% | Within the range many lenders like to see. |
| $8,000 | 23.75% | Within the range many lenders like to see. |
| $10,000 | 19% | Within the range many lenders like to see. |
What DTI means
Back-end DTI is all monthly debt payments divided by gross monthly income. With $1,500 housing, $400 of other debts and $6,000 of income, it is ($1,500 + $400) ÷ $6,000 = 31.7%. Front-end DTI looks only at housing: $1,500 ÷ $6,000 = 25%.
Both ratios tell a lender how much of your income is already committed. A lower ratio means more room to take on a loan and a lower risk to the lender.
What ratios lenders like
Limits differ by lender, loan type and country, and they change, so treat these as general guides. Many mortgage lenders like to see a back-end ratio of about 36% or lower, many allow up to the low 40s, and some programs accept higher ratios with strong credit or savings. Front-end ratios around 28% have long been a common guide for housing.
In the default example the back-end ratio is 31.7%, which is within the range many lenders like to see. If the income were $4,000, the ratio would rise to 47.5%, and at $10,000 it would fall to 19%.
What counts as debt
Count required monthly payments: rent or mortgage payment, car loans, student loans, personal loans, minimum credit card payments, and child support or alimony that you must pay. Everyday costs such as groceries, utilities, insurance premiums (apart from mortgage insurance), phone bills and subscriptions are not counted.
Use gross income, which is income before tax and other deductions. Lenders may count regular bonuses, commissions and other income if they are documented and stable.
How to lower your DTI
You can lower the ratio by paying down debts, especially ones with high monthly payments relative to the balance, by avoiding new loans before you apply, or by raising your income. Paying off a loan removes its payment from the ratio completely, while paying down a credit card only lowers the minimum payment gradually.
Consider a longer loan term to reduce a monthly payment only if it makes sense overall, because it may increase total interest. Use the mortgage and auto loan calculators on this site to test the numbers.
Frequently asked questions
What is a good DTI?
Many lenders prefer a back-end ratio of about 36% or lower, and some accept higher. Rules vary by lender and loan type.
What is the difference between front-end and back-end DTI?
Front-end DTI counts only housing costs. Back-end DTI counts housing plus all other monthly debts.
What counts as debt in DTI?
Housing, car loans, student loans, credit card minimums and other required monthly payments. Everyday costs like food and utilities are not counted.
Should I use gross or net income?
Gross income, before tax and deductions, is the standard measure.
Does DTI affect my credit score?
No. Credit scores do not include income. But the debts behind your ratio, such as high balances, can affect your score.
How can I improve my DTI?
Pay down debts with high monthly payments, avoid new debt before applying and increase your income where possible.
This calculator gives estimates for information only. Actual figures from a bank, employer, tax authority or doctor may differ. It is not financial, tax, legal or medical advice.