How this calculator works
You enter gross monthly income, meaning pay before taxes and deductions (for a salary, the annual amount divided by 12), and five kinds of monthly payment: rent or mortgage, car loans, student loans, credit card minimums and other required debts such as personal loans, child support or alimony. For a mortgage, use the full payment, including any property taxes and insurance it covers, plus any HOA dues, which are usually paid separately.
The calculator adds the payments and divides them by income to get your DTI. It also shows the housing payment on its own as a second ratio, since some mortgage lenders look at both, and how many percentage points each extra $100 of monthly debt would add at your income.
The formula
DTI uses monthly payments, not total balances. A student loan with a $180 monthly payment adds $180 to the calculation, however large the balance. Income is gross, before taxes, so the ratio describes your debt load against what you earn rather than against what you take home.
Lenders sometimes call the housing share the front-end ratio and the all-debts figure the back-end ratio. The math is the same division; only the payments counted change. Because income sits in the denominator, a raise lowers both ratios even if every payment stays exactly the same.
A worked example
Picture an illustrative gross income of $5,000 a month, with a $1,350 rent payment, a $350 car payment, $180 of student loan payments and $120 of card minimums. Those payments total $2,000, so the DTI is 40.0% and housing alone is 27.0%. At this income, each extra $100 of monthly debt adds 2.0 percentage points.
If the car loan were paid off, payments would fall to $1,650 and the DTI to 33.0%, while the housing ratio would stay at 27.0%. Paying down part of a car loan, by contrast, usually leaves its monthly payment, and so the DTI, unchanged. Only paying it off or refinancing it changes the payment.
| Illustrative monthly figure | Amount |
|---|---|
| Gross monthly income | $5,000 |
| Rent | $1,350 |
| Car loan payment | $350 |
| Student loan payments | $180 |
| Credit card minimums | $120 |
| Total debt payments | $2,000 |
| Debt-to-income ratio | 40.0% |
| Housing alone | 27.0% |
What the result doesn’t tell you
Lenders set their own limits and decide which payments count, so the same numbers can be judged differently from one lender or loan type to the next. Some may count a debt you aren’t paying today, such as a deferred student loan, or leave out one that is about to end. For a mortgage application, the housing figure is generally the payment on the home you’re buying, not your current rent.
DTI also leaves out everyday costs. Groceries, utilities, childcare and phone bills aren’t debts, so they don’t appear, and because the ratio uses gross income, taxes aren’t subtracted either. A ratio that looks manageable can still leave a tight monthly budget, so it’s worth checking the same payments against take-home pay as well.
Common questions
What is a good debt-to-income ratio?
There’s no single number. Each lender and loan type sets its own limits, and lenders may also weigh credit history, savings and the size of a down payment. A lower ratio generally leaves more room in your budget and in a lender’s calculation, but no ratio guarantees approval. Your own comfort with the payments matters as much as any lender’s cutoff.
Does rent count in a debt-to-income ratio?
It depends on the lender and the loan. This calculator includes rent so you can see your full housing load. A mortgage lender generally looks at the payment on the home you’d buy instead of your current rent, and lenders for other kinds of credit handle rent in different ways. Asking the lender which payments it counts settles the question.
Is DTI based on gross or take-home pay?
Gross pay, meaning income before taxes and other deductions, is the usual basis, and it’s what this calculator uses. For a salary, divide the annual amount by 12. Because gross pay is larger than take-home pay, DTI can make a budget look roomier than it feels, so a separate take-home budget is a useful second check.
How can I lower my debt-to-income ratio?
The ratio falls when monthly payments go down or income goes up. Paying off a debt entirely removes its payment, while paying down part of an installment loan usually leaves the payment unchanged. Refinancing to a lower payment can reduce DTI but may cost more interest overall if it stretches the term. Avoiding new payments before an application keeps the ratio where it is.
Terms on this page
Sources and further reading
Examples are illustrative and focus on U.S. personal finance. This page is educational, not individual financial, investment, tax, or legal advice. Read our editorial approach or report a correction.
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