1. What is Debt to Income Ratio?

The Debt to Income (DTI) ratio is a personal finance measure that compares an individual's monthly debt payments to their monthly gross income. It's expressed as a percentage and is 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 obligations (credit cards, loans, mortgages, etc.)
• Monthly Income — Gross monthly income before taxes and deductions

Explanation: The ratio shows what percentage of your income goes toward debt payments each month.

3. Importance of DTI Calculation

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

4. Using the Calculator

Tips: Include all recurring monthly debts (minimum payments for credit cards, auto loans, student loans, mortgage/rent, etc.). Use gross income (before taxes).

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. Below 20% is excellent.

Q2: Does rent count in DTI?
A: Yes, rent or mortgage payments are included in the monthly debt calculation.

Q3: What's the maximum DTI for a mortgage?
A: Conventional loans typically allow up to 43%, FHA loans may allow up to 50% in some cases.

Q4: Should utilities be included in DTI?
A: No, only recurring debt obligations are included, not living expenses like utilities or groceries.

Q5: How can I improve my DTI?
A: Either increase your income or reduce your debt. Paying down balances or consolidating debts can help.