Debt-to-Income Ratio Calculator
Use this professional tool to achieve accurate results quickly and efficiently.
Loading tool...
Debt-to-Income (DTI) Ratio Calculator
Calculate your debt-to-income ratio to understand your financial health.
Enter your total monthly income. Enter your total monthly debt payments (loans, credit cards, etc.).DTI Ratio Result
Your debt-to-income ratio will be displayed here.
Please calculate your DTI ratio to see the result.
About This Tool
Determine your financial health by calculating your Debt-to-Income (DTI) ratio. Assess how much of your income goes toward paying debts and plan your finances better.
What is a Debt-to-Income Ratio?
The Debt-to-Income (DTI) ratio is a percentage that compares your total monthly debt payments to your gross monthly income. It is an essential factor used by lenders to evaluate your ability to manage monthly payments and repay borrowed funds.
How to Use the DTI Calculator?
Follow these simple steps to calculate your DTI ratio:
- Enter your total monthly debt payments, including loans, credit card bills, and other recurring obligations.
- Input your gross monthly income (before taxes and deductions).
- Click "Calculate" to find your DTI ratio.
The result will help you understand your financial position and whether you’re eligible for a loan.
Debt-to-Income Ratio Formula
The formula for calculating the Debt-to-Income ratio is as follows:
DTI Ratio (%) = (Total Monthly Debt Payments / Gross Monthly Income) × 100
Example Calculation:
| Detail | Amount |
|---|---|
| Total Monthly Debt Payments | $2,000 |
| Gross Monthly Income | $6,000 |
| DTI Ratio | 33.33% |
In this example, 33.33% of the individual’s gross income is used to pay debts.
Why is the DTI Ratio Important?
Lenders use the DTI ratio to evaluate your loan eligibility. A lower DTI ratio indicates better financial health and higher chances of loan approval.
Generally, the following DTI guidelines are used:
- Below 36%: Considered ideal for most lenders.
- 37%-43%: May still qualify for a loan but with stricter terms.
- Above 43%: Risk of loan denial or higher interest rates.
Key Factors Influencing Your DTI Ratio
- Income: Higher income reduces your DTI ratio.
- Debt Load: Lowering debt payments improves the ratio.
- Loan Term: Spreading out loan payments over a longer term may reduce monthly payments and improve your DTI.
- Interest Rates: Higher interest rates increase monthly payments, negatively impacting your DTI.
Frequently Asked Questions
The DTI ratio is the percentage of your gross monthly income used to pay debts. It’s a key indicator of financial health.
Lenders evaluate your DTI ratio to determine your loan eligibility. A lower DTI indicates higher repayment capacity.
A DTI ratio below 36% is ideal. Ratios above 43% may lead to loan denials or stricter terms.
You can lower your DTI ratio by paying off debts, increasing income, or refinancing loans for better terms.
Yes, our Debt-to-Income Ratio Calculator is completely free and easy to use.
Explore More Tools
Discover our complete collection of professional tools designed to make your work easier and more efficient.