Debt-to-Income Ratio Calculator
Use our **free DTI tool** to easily calculate your Debt-to-Income ratio and understand your financial health.
Calculate Your DTI
Your Results
Enter your financial data to see your DTI ratio and a summary of your financial health.
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What is Debt-to-Income Ratio (DTI)?
Your **debt to income ratio calculator** is a crucial metric that lenders use to assess your ability to manage monthly debt payments and repay money you plan to borrow. It is calculated by dividing your total monthly debt payments by your total monthly gross income. A low DTI indicates that you have a good balance of income and debt, making you a more attractive borrower.
This **DTI ratio calculator** provides a quick way to **calculate DTI** and helps you understand where you stand financially. Whether you are applying for a **mortgage DTI tool** or a personal loan, knowing your DTI is the first step in financial planning.
How to Calculate Debt to Income
User Guide
To use this tool, simply enter your **total monthly debt payments** (including rent, loans, and credit cards) and your **total monthly gross income** (before taxes) into the fields above. Click the "Calculate DTI" button to get your percentage and a detailed analysis of your financial health.
Formula Explained
DTI (%) = (Sum of All Monthly Debt Payments ÷ Monthly Gross Income) × 100
This formula reflects what portion of your income is used to service your debt obligations, providing a clear picture of your financial health.
Frequently Asked Questions
What is a good debt-to-income ratio?
Ideally, a **good DTI ratio** is below 36%. A DTI above 50% is considered very high and may indicate a risky financial situation.
Does this include taxes in income?
No, the DTI calculation uses **pre-tax (gross) income**. Lenders evaluate your income before taxes and other deductions are taken out.
Can I include rent in my monthly debt?
Yes, for a **front-end vs back-end DTI** calculation, rent is typically included in your monthly housing payments, which is a key component of your debt for mortgage applications.
Why is DTI important?
Lenders use your DTI ratio to assess your affordability and determine your eligibility for a loan. A lower DTI suggests you have more disposable income to handle new debt, increasing your chances of loan approval.
How can I lower my DTI?
You can lower your DTI by either paying down existing debts or by increasing your gross monthly income, or both. Consolidating high-interest debt can also be an effective strategy.