Calculate My Dti

Debt-to-Income (DTI) Ratio Calculator

Total Monthly Debt Payments

Your Debt-to-Income Ratio will appear here.

function calculateDTI() { var monthlyGrossIncome = parseFloat(document.getElementById('monthlyGrossIncome').value); var monthlyHousingPayment = parseFloat(document.getElementById('monthlyHousingPayment').value); var monthlyCarLoanPayment = parseFloat(document.getElementById('monthlyCarLoanPayment').value); var monthlyStudentLoanPayment = parseFloat(document.getElementById('monthlyStudentLoanPayment').value); var monthlyCreditCardPayments = parseFloat(document.getElementById('monthlyCreditCardPayments').value); var otherMonthlyLoanPayments = parseFloat(document.getElementById('otherMonthlyLoanPayments').value); if (isNaN(monthlyGrossIncome) || monthlyGrossIncome < 0) { document.getElementById('dtiResult').innerHTML = 'Please enter a valid positive number for Monthly Gross Income.'; return; } if (isNaN(monthlyHousingPayment) || monthlyHousingPayment < 0) monthlyHousingPayment = 0; if (isNaN(monthlyCarLoanPayment) || monthlyCarLoanPayment < 0) monthlyCarLoanPayment = 0; if (isNaN(monthlyStudentLoanPayment) || monthlyStudentLoanPayment < 0) monthlyStudentLoanPayment = 0; if (isNaN(monthlyCreditCardPayments) || monthlyCreditCardPayments < 0) monthlyCreditCardPayments = 0; if (isNaN(otherMonthlyLoanPayments) || otherMonthlyLoanPayments < 0) otherMonthlyLoanPayments = 0; var totalMonthlyDebtPayments = monthlyHousingPayment + monthlyCarLoanPayment + monthlyStudentLoanPayment + monthlyCreditCardPayments + otherMonthlyLoanPayments; if (monthlyGrossIncome === 0) { document.getElementById('dtiResult').innerHTML = 'Monthly Gross Income cannot be zero. Please enter a valid income.'; return; } var dtiRatio = (totalMonthlyDebtPayments / monthlyGrossIncome) * 100; var resultText = 'Your Debt-to-Income Ratio is: ' + dtiRatio.toFixed(2) + '%'; if (dtiRatio 36 && dtiRatio <= 43) { resultText += 'This DTI ratio is acceptable for many lenders, but there might be room for improvement.'; } else { resultText += 'This DTI ratio is generally considered high and may make it challenging to qualify for new loans.'; } document.getElementById('dtiResult').innerHTML = resultText; }

Understanding Your Debt-to-Income (DTI) Ratio

The Debt-to-Income (DTI) ratio is a crucial financial metric that lenders use to assess your ability to manage monthly payments and repay debts. It's a percentage that compares your total monthly debt payments to your gross monthly income. A lower DTI ratio indicates a lower risk to lenders, making it easier to qualify for loans like mortgages, car loans, or personal loans.

What is Included in DTI?

Your DTI ratio typically includes two main components:

1. Gross Monthly Income: This is your total income before taxes, deductions, or other expenses are taken out. It includes your salary, wages, tips, commissions, bonuses, and any other regular income sources.
2. Total Monthly Debt Payments: This sum includes recurring monthly obligations such as:
   • Mortgage or rent payments
   • Property taxes and homeowner's insurance (if not escrowed with mortgage)
   • Homeowners Association (HOA) fees
   • Car loan payments
   • Student loan payments
   • Minimum credit card payments
   • Personal loan payments
   • Other installment loan payments
   It generally does NOT include utility bills, phone bills, food expenses, or other everyday living costs.

How is DTI Calculated?

The formula for calculating your DTI ratio is straightforward:

DTI Ratio = (Total Monthly Debt Payments / Gross Monthly Income) × 100

Why is Your DTI Ratio Important?

Lenders use your DTI ratio as a key indicator of your financial health. It helps them determine if you have enough disposable income to take on additional debt. A high DTI ratio suggests that a significant portion of your income is already committed to debt payments, potentially leaving little room for new obligations or unexpected expenses.

What is a Good DTI Ratio?

While acceptable DTI ratios can vary by lender and loan type, here are general guidelines:

• 36% or Less: This is generally considered a very good DTI ratio. It indicates that you have a healthy balance between your income and debt, making you a low-risk borrower for most lenders.
• 37% to 43%: This range is often acceptable, especially for mortgage lenders. You might still qualify for loans, but lenders may scrutinize other aspects of your financial profile more closely.
• Over 43%: A DTI ratio above 43% is generally considered high. While some government-backed loans (like FHA loans) might allow higher DTIs, many conventional lenders may find it challenging to approve new credit.

Example Calculation:

Let's say your monthly gross income is $5,000. Your monthly debt payments are:

• Mortgage: $1,500
• Car Loan: $350
• Student Loan: $200
• Credit Card Minimums: $100
• Other Loan: $50

Your total monthly debt payments would be $1,500 + $350 + $200 + $100 + $50 = $2,200.

Your DTI ratio would be ($2,200 / $5,000) × 100 = 44%.

In this example, a 44% DTI ratio is on the higher side, which might make it harder to get approved for new loans without improving your financial standing.

How to Improve Your DTI Ratio:

If your DTI ratio is higher than you'd like, here are some strategies to improve it:

1. Increase Your Income: Seek opportunities for raises, bonuses, or a second job to boost your gross monthly income.
2. Reduce Your Debt: Focus on paying down existing debts, especially those with high interest rates. Even paying off a small loan or credit card balance can make a difference.
3. Avoid New Debt: Try to avoid taking on new loans or increasing credit card balances, especially if you're planning to apply for a major loan soon.
4. Refinance Debts: If possible, refinance existing loans (like student loans or personal loans) to a lower monthly payment, which can reduce your total monthly debt obligations.

Regularly checking your DTI ratio can help you stay on top of your financial health and make informed decisions about your borrowing capacity.