Debt-to-Income (DTI) Ratio Calculator

What Is a Debt-to-Income Ratio?

The Debt-to-Income Ratio (DTI) is a percentage that shows how much of your gross income (before taxes) goes toward paying debts each month. For instance, if you earn $1,000 monthly and spend $480 on debt payments, your DTI would be 48%. If you don’t have any debt, your DTI would be 0%.

There’s also a related metric called the credit utilization ratio, or debt-to-credit ratio. This reflects how much of your available credit you’re using and directly affects your credit score—the higher it is, the more it can hurt your score.

Why Does DTI Matter?

Your DTI is a key indicator of your financial condition and how manageable your current debt is. Lenders such as banks, credit card issuers, mortgage providers, and auto loan companies use this figure to determine whether you can responsibly take on more debt.

A lower DTI generally suggests you’re a lower-risk borrower, while a higher DTI might raise concerns about your ability to repay. For example, a credit card company may approve someone with a 45% DTI, but a personal loan provider might reject the same person. Each lender sets its own limits, but as a rule of thumb—the lower the DTI, the better.

Types of DTI Ratios

Front-End Ratio

The front-end DTI (also called the housing ratio) focuses only on housing-related costs. It’s calculated by dividing total monthly housing expenses (like rent or mortgage, property taxes, homeowners insurance, and HOA fees) by gross monthly income. Most U.S. mortgage lenders prefer a front-end DTI below 28%.

Back-End Ratio

The back-end DTI includes all monthly debt obligations—housing, credit cards, auto loans, student loans, and more. This is the more common DTI used by lenders. For conventional home loans, the ideal back-end ratio is 36% or less.

DTI and Home Buying

Mortgage lenders use DTI to determine how much home you can afford. Common DTI thresholds include:

• Conventional loans: 28% front-end / 36% back-end

• FHA loans: 31% front-end / 43% back-end

• VA loans: 41% front-end and back-end

Want to know how much home you can afford based on your DTI? Use our House Affordability Calculator to estimate your maximum mortgage eligibility.

DTI as a Financial Health Tool

Besides lending, DTI can help you evaluate your own financial health. Here’s a general guideline:

• DTI of 33% or lower: Healthy and manageable

• DTI of 50% or more: Risky—half your income goes toward debt

Maintaining a lower DTI allows for greater financial flexibility and less stress in the long run.

Tips to Lower Your DTI Ratio

1. Boost Your Income

Take on a side job, freelance gig, ask for a raise, or monetize a hobby. Even a small increase in income can lower your DTI if your debt stays the same.

2. Stick to a Budget

Managing a monthly budget helps you spot areas where you can cut costs—like eating out, subscriptions, or non-essential shopping. Use our Budget Calculator to plan and track your spending.

3. Lower High-Interest Debt

Try to reduce debts with high interest rates, such as credit card balances. You might:

• Call your credit card issuer to negotiate a lower rate

• Consolidate multiple debts into one with a lower interest rate

Explore our Credit Card Calculator and Debt Consolidation Calculator to see how much you could save.