Debt-to-Income Ratio Calculator
Calculate and analyze your debt-to-income ratio to assess your financial health and borrowing capacity. Find out if your DTI meets lender requirements.
Category: Financial
Debt-to-Income Ratio Calculator
Frequently Asked Questions
What is a debt-to-income ratio?
A debt-to-income ratio (DTI) is a financial measurement that compares your total monthly debt payments to your gross monthly income, expressed as a percentage. It helps lenders evaluate your ability to manage monthly payments and repay debts.
What is a good debt-to-income ratio?
Generally, a DTI ratio of 36% or less is considered good. Most lenders prefer a DTI ratio of 36% or less, with housing costs not exceeding 28% of your gross monthly income. A DTI of 43% is typically the highest ratio that will qualify for a mortgage.
How can I improve my debt-to-income ratio?
You can improve your DTI ratio by increasing your income, paying down existing debt, avoiding taking on new debt, or refinancing existing debts to lower monthly payments.
Why is DTI important for loan approval?
Lenders use DTI to assess your ability to repay loans. A lower DTI suggests you have a good balance between debt and income and can comfortably take on additional debt. High DTI ratios may indicate financial stress and higher risk for lenders.