1. What is Debt To Income Ratio?

The Debt To Income Ratio (DTI) measures the percentage of a person's gross monthly income that goes toward paying debts. It's a key metric used by lenders to evaluate a borrower's ability to manage monthly payments and repay debts.

2. How Does the Calculator Work?

The calculator uses the DTI formula:

Where:

• Total monthly debt payments — Sum of all monthly debt obligations (mortgage, credit cards, loans, etc.)
• Gross monthly income — Total income before taxes and deductions

Explanation: The ratio shows what portion of income is already committed to debt payments.

3. Importance of DTI Calculation

Details: Lenders typically prefer a DTI below 36%, with no more than 28% of that debt going toward mortgage payments. A DTI above 43% may make it difficult to qualify for loans.

4. Using the Calculator

Tips: Enter your total monthly debt payments and gross monthly income in dollars. Both values must be positive numbers, with income greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What debts should be included?
A: Include all recurring monthly debts: mortgage/rent, car payments, credit card minimums, student loans, personal loans, alimony, etc.

Q2: What income should be included?
A: Include all pre-tax income: salary, wages, bonuses, commissions, alimony received, investment income, rental income, etc.

Q3: What is a good DTI ratio?
A: Generally: ≤35% = excellent, 36-43% = acceptable, 44-49% = stretching, ≥50% = high risk.

Q4: How can I improve my DTI?
A: Either increase income or reduce debt. Paying down balances or consolidating high-interest debt can help.

Q5: Is DTI the same as credit utilization?
A: No. Credit utilization measures credit card balances relative to limits, while DTI measures all debt payments relative to income.