Debt-to-Income Ratio Calculator
Monthly Income
Monthly Debt Payments
Understanding Debt-to-Income Ratio: What Lenders Look For
Why DTI Matters More Than Credit Score
While credit scores get more attention, your debt-to-income ratio (DTI) is equally important because:
- Predicts your ability to take on new debt
- Directly impacts loan approval chances
- Affects the interest rates you qualify for
- Indicates financial stress levels
DTI Thresholds for Different Loan Types
| Loan Type | Maximum DTI | Ideal DTI |
|---|---|---|
| Conventional Mortgage | 43-50% | ≤36% |
| FHA Loan | 43-57% | ≤43% |
| Auto Loan | 45-50% | ≤36% |
| Personal Loan | 40-50% | ≤35% |
5 Ways to Improve Your DTI Ratio
Reduce Debt
- Pay off credit cards monthly
- Use debt avalanche/snowball methods
- Consider debt consolidation
Increase Income
- Ask for a raise or promotion
- Start a side hustle
- Monetize hobbies/skills
What Counts in DTI Calculations?
- Included Debts: Mortgage/rent, auto loans, credit card minimums, student loans, personal loans, alimony/child support
- Not Included: Utilities, groceries, insurance, medical bills (unless in collections), discretionary spending
- Income Sources: Wages, bonuses, commissions, alimony, Social Security, investment income (if consistent)
Did You Know? The average American household has a DTI ratio of 42%. Those with DTIs under 36% qualify for the best interest rates and have 3x higher approval rates for mortgages.