Your debt-to-income ratio (DTI) is a simple percentage that compares your total monthly debt payments to your gross monthly income. Lenders use it to measure how much of your income is already committed to debt — and how much is left over to handle a new loan or mortgage.
Most lenders follow these general guidelines:
If you're applying for a mortgage, your DTI is one of the most important factors lenders review. For a conventional loan, most lenders prefer a DTI below 43%. For FHA loans, you may qualify with a DTI up to 50% in some cases. The lower your DTI, the better your chances of approval and the more favorable your interest rate.
If your DTI is too high, there are two ways to bring it down: reduce your monthly debt payments or increase your income. Practical steps include paying off smaller debts first, avoiding new loans or credit cards before applying for a mortgage, and looking for ways to increase your monthly income.
Enter your gross monthly income (before taxes) and your total monthly debt payments — including car loans, student loans, credit card minimums, and any other recurring debt obligations. Do not include everyday expenses like groceries or utilities. Hit calculate and your DTI ratio will appear instantly along with a breakdown of what it means for your financial health.