Comprehensive Guide
Learn more in our Planning Guide.
How it works
Debt-to-income ratio is the number lenders actually underwrite, and it is simpler than most people expect: total monthly debt payments divided by gross monthly income, before taxes. The calculator adds the payments that count — housing (rent or the full mortgage payment with taxes and insurance), auto loans, minimum credit card payments, and other obligations like student loans and child support — then divides by gross income. What does not count: utilities, groceries, subscriptions and insurance premiums, because they are expenses, not debts. The thresholds come straight from mortgage underwriting. At or below 36%, lenders see a comfortable borrower with room to absorb surprises. Between 36% and 43% is fair — approvals still happen, but terms tighten and compensating factors start to matter. Above 43% is the ceiling for most qualified mortgages, where borrowing more becomes difficult and every rate shock lands directly on the household budget. Two levers move the ratio, and the calculator makes both visible: paying down debts removes payments from the numerator, and raising income grows the denominator. A loan payoff that deletes a $420 payment improves DTI exactly as much as a $5,800 raise — which is why the cheapest way to qualify for a mortgage is often retiring a car loan first.Formula
DTI = (housing + auto + cards + other monthly debt) / gross monthly income x 100
Tips
- Lenders count the full housing payment — principal, interest, taxes and insurance — not just the loan.
- Only minimum required card payments count, but paying cards in full monthly keeps them at zero.
- Paying off a small loan is the fastest DTI fix — deleting a $420 payment beats a $5,800 raise.
- Gross income is before taxes; do not use take-home or you will overstate the ratio.
- Recompute after every debt payoff — the drop is often larger than expected.
Frequently asked questions
How do I calculate my debt-to-income ratio?
Add your monthly debt payments — housing, auto loans, minimum credit card payments, student loans and other contractual debts — and divide by your gross monthly income before taxes, then multiply by 100. A $2,390 debt load on $7,200 of gross income is a DTI of about 33%.
What is a good debt-to-income ratio?
At or below 36% is the traditional comfort zone, and mortgage lenders historically preferred total DTI under 36% with housing under 28%. Between 36% and 43% approvals continue but tighten. Above 43% you cross the ceiling for most qualified mortgages and borrowing becomes genuinely difficult.
What counts as debt in DTI?
Only contractual debt payments: rent or the full mortgage payment including taxes and insurance, auto and student loans, minimum card payments, personal loans, child support and alimony. Utilities, groceries, subscriptions and insurance premiums are expenses, not debts, and do not count.
How can I lower my DTI fast?
Two levers: delete a payment or grow income. Paying off a car loan with a $420 payment lowers DTI exactly as much as a $5,800 raise would, which is why retiring a small loan is often the fastest route to qualifying. Consolidating card balances into a lower fixed payment also helps.
Does DTI affect my credit score?
No — income is not in your credit report, so DTI cannot touch the score. It is a separate underwriting test lenders apply alongside the score. A borrower can have an excellent score and still be declined on DTI, which surprises many first-time mortgage applicants.