1. What is DTI?

DTI (Debt-to-Income ratio) is a personal finance measure that compares an individual's monthly debt payments to their monthly income. It's expressed as a percentage and used by lenders to evaluate a borrower's ability to manage monthly payments.

2. How Does the Calculator Work?

The calculator uses the DTI formula:

Where:

• Monthly Debt — Sum of all monthly debt payments
• Monthly Income — Gross monthly income before taxes

Explanation: The ratio shows what portion of income goes toward debt repayment each month.

3. Importance of DTI Calculation

Details: Lenders use DTI to assess loan eligibility. Generally, a DTI below 36% is good, 36-43% may limit borrowing options, and above 43% may disqualify you from loans.

4. Using the Calculator

Tips: Include all monthly debt obligations (mortgage/rent, car loans, credit cards, student loans, etc.) and your total gross monthly income from all sources.

5. Frequently Asked Questions (FAQ)

Q1: What's a good DTI ratio?
A: Ideally below 36%, with no more than 28% going toward housing expenses. Above 43% is typically problematic for new loans.

Q2: What debts are included in DTI?
A: Include all recurring monthly debts: mortgage/rent, auto loans, student loans, credit card minimums, personal loans, alimony/child support.

Q3: What income is counted?
A: Gross (pre-tax) income from employment, self-employment, investments, retirement, social security, and other regular income sources.

Q4: How can I improve my DTI?
A: Either increase income (side jobs, raises) or reduce debt (pay down balances, consolidate loans, avoid new debt).

Q5: Is front-end or back-end DTI more important?
A: Lenders look at both. Front-end considers just housing costs, back-end considers all debt obligations.