How to use it
- Enter your total monthly debt payments.
- Enter your total monthly gross income.
- Click Calculate to see your DTI percentage.
What it does
The DTI Calculator takes the two numbers you provide—monthly debt payments and monthly gross income—and returns a single percentage. That percentage is your debt‑to‑income ratio, a standard measure lenders use to gauge borrowing risk.
Why it matters
A lower DTI means you have more income left after bills, which can improve your chances of getting a mortgage, car loan, or credit line at favorable rates. A high DTI signals financial strain and may limit credit options.
How to read the result
- Below 20% : Excellent, strong borrowing power.
- 20%‑36% : Typical range for most borrowers.
- Above 36% : May need to reduce debt before applying for new credit.
Pro tips
- Round your income and debt to the nearest dollar for consistency.
- If you have irregular income, use the average of the last 12 months.
- Include all recurring obligations—credit cards, loans, alimony—to avoid under‑reporting.
- Compare your DTI to lender guidelines before you apply for a loan.
Real-life examples
- First‑time homebuyer checking eligibility for a mortgage.
- Car buyer evaluating if a loan payment fits the budget.
- Freelancer assessing whether a personal loan is affordable.
Case study
Sarah earned $5,200 a month and had $1,200 in debt payments. Using the calculator she saw a DTI of 23%. She trimmed a credit‑card balance, lowered her DTI to 18%, and qualified for a lower‑rate mortgage.