✨ Understanding your Debt-to-Income Ratio (DTI) is super important when it comes to managing your finances — especially if you’re applying for a loan or mortgage. Luckily, calculating it is easy, and we’ll break it down for you step by step.
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🧮 DTI Calculator
Enter your monthly debt payments and gross monthly income. The tool will calculate your debt-to-income ratio
🙋 What is Debt-to-Income Ratio?
Your DTI ratio compares how much you owe each month to how much you earn. It’s expressed as a percentage and helps lenders figure out how financially stretched you are.
In simple terms:
DTI = Monthly Debt Payments ÷ Gross Monthly Income × 100
⚙️ Step-by-Step: How to Calculate It
Step 1: Add up your monthly debt payments
Include all recurring debt payments like:
- Mortgage or rent
- Car loan payments
- Student loans
- Credit card minimum payments
- Personal loan payments
👉 Don’t include groceries, utilities, or subscriptions — only fixed debt obligations.
Step 2: Figure out your gross monthly income
This is your income before taxes. If you’re salaried, just divide your annual income by 12. If you’re paid hourly, multiply your hourly rate by the average hours you work each week, then multiply by 4.33 (average weeks per month).
Step 3: Plug the numbers into the formula
DTI (%) = (Monthly Debt Payments ÷ Gross Monthly Income) × 100Example:
- Monthly debts = $1,800
- Gross monthly income = $5,000
DTI = (1800 ÷ 5000) × 100 = 36%🎯 That means 36% of your gross income is going toward paying debt.
📌 What’s a Good DTI Ratio?
| DTI Range | Meaning |
|---|---|
| 0% – 36% | ✅ Excellent – Most lenders approve loans |
| 37% – 43% | ⚠️ Acceptable – You may still qualify |
| 44% – 50% | 🚧 Risky – Harder to get approved |
| Over 50% | ❌ High Risk – Likely to be denied |
💡 Why It Matters
Lenders use your DTI to assess your ability to repay a loan. The lower your DTI, the better your chances of getting approved for:
- 🏡 Mortgages
- 🚗 Auto loans
- 💳 Credit cards
- 💼 Business loans
A low DTI shows you’re managing your debt responsibly. If your DTI is high, it might be time to reduce your debt or increase your income before applying for more credit.
✨ Quick Tips to Lower Your DTI
- Pay off smaller debts first
- Avoid taking on new loans
- Refinance at lower interest rates
- Increase your income (side hustle, raise, etc.)