What's a good DTI ratio?

Most lenders prefer a DTI below 43%. A ratio under 36% is considered very healthy and gives you strong borrowing power. Above 50% signals financial stress and makes approval unlikely.

Can I improve my DTI?

Yes. Pay down existing debt to lower your numerator, or increase your income to raise the denominator. Even small reductions in debt payments or increases in income shift your ratio in your favor.

Do lenders all calculate DTI the same way?

Mostly, but there are variations. Some include rent, others don't. Some count alimony, others exclude it. Always ask your lender exactly what they include in their calculation.

Should I include my partner's income and debt?

Only if you're applying for joint credit. For individual loans, use only your own income and debts. For joint applications, combine both.

What if I'm self-employed?

Lenders typically average your net self-employment income over the last 2 years. You'll need tax returns to document this. Irregular income may be averaged or excluded entirely.

Does my DTI affect my credit score?

Not directly. Your credit score depends on payment history, credit utilization, and age of accounts. DTI is used separately by lenders to assess loan eligibility, not to calculate your score.

Debt-to-Income Ratio Calculator

What your DTI ratio means

Your debt-to-income (DTI) ratio is the percentage of your gross monthly income that goes toward debt payments. Lenders use this number to decide whether you qualify for mortgages, personal loans, credit cards, and other credit products. A lower DTI signals that you have room in your budget to take on new debt; a higher one suggests you're already stretched thin.

Most conventional lenders prefer a DTI below 43%, though some will go higher for borrowers with strong credit scores or substantial savings. Understanding your ratio helps you know where you stand before you apply.

The formula

DTI Ratio (%) = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100

Worked example

Let's say you earn $5,000 gross per month and have these monthly debt obligations:

Car loan: $350
Credit card minimum: $75
Student loan: $200
Mortgage or rent: $1,200

Step 1: Add up all monthly debt payments. $350 + $75 + $200 + $1,200 = $1,825

Step 2: Divide total debt by gross monthly income. $1,825 ÷ $5,000 = 0.365

Step 3: Multiply by 100 to get the percentage. 0.365 × 100 = 36.5%

Your DTI ratio is 36.5%. This falls comfortably below the 43% threshold most lenders use, meaning you'd likely qualify for additional credit. You have roughly $630 per month in debt capacity before hitting that 43% ceiling (assuming your income stays the same).

What counts as debt

Include any recurring monthly payment obligation:

Mortgage or rent (some lenders include rent, others don't—check with your lender)
Car loans and auto financing
Student loans
Credit card minimum payments
Personal loans
Medical or installment payments
Alimony or child support
Other lines of credit

Do not include utilities, insurance premiums, groceries, phone bills, or other living expenses—only debt obligations.

Income that counts

Use your gross monthly income before taxes:

Salary or wages (base pay only; exclude bonuses unless guaranteed)
Self-employment income (average of last 2 years, typically)
Investment income or rental income
Alimony or child support received
Social Security or pension payments

Do not include tax refunds, one-time bonuses, or irregular income unless you can document it consistently.

Front-end vs. back-end DTI

Some lenders also calculate a front-end ratio, which includes only housing debt (mortgage or rent) divided by gross income. This is typically capped at 28%. The ratio you calculate here is the back-end ratio—the total of all debt—which is what most people refer to when discussing DTI.

Common mistakes to avoid

Using net income instead of gross. Always use your pre-tax, pre-deduction income. Lenders want to see the full picture of what you earn.

Forgetting small payments. A $50 gym membership or subscription service won't appear on your credit report, so it won't count toward DTI—but other small loans do. Only include obligations that appear on your credit file.

Including income that won't last. If you're relying on a temporary job, bonus, or side gig to boost your income, lenders may not count it. Stick with stable, documented income.

Ignoring pending debt. If you've just applied for a car loan or new credit card (even if not yet approved), some lenders will factor in the expected payment when evaluating your DTI for a new application.

This calculator provides an estimate to help you understand your financial position. For loan applications, lenders may use slightly different calculations or definitions of income and debt. Always verify the specific requirements with your lender.