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Debt

Debt-to-income ratio

Also called: DTI, DTI ratio

Debt-to-income ratio (DTI) is your total monthly debt payments divided by your gross monthly income, multiplied by 100. Lenders use it as one way to gauge whether you can manage the payments on new borrowing, and their limits vary.

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How it works

The calculation adds up the monthly payments owed on debts, such as a car loan, student loans, credit card minimums, and a mortgage, then divides the total by gross monthly income, which is pay before taxes and other deductions. Multiplying by 100 turns it into a percentage. Each debt counts by its monthly payment, not its balance: an $18,000 loan with a $400 payment adds $400.

Lenders use DTI as one measure of whether a new payment fits alongside the ones you already have. Each lender and loan product sets its own limits and may count certain items differently, so the same household can get different results from different lenders. No single ratio guarantees approval, and DTI is only one part of how an application is reviewed.

DTI is not a full budget. Because it starts from gross pay, taxes are not subtracted, and everyday costs such as food, utilities, and childcare are left out. A ratio a lender accepts can still leave a tight month, which is why comparing the same payments with take-home pay and actual spending can give a clearer picture of affordability.

Try it with your own numbersDebt-to-Income Ratio CalculatorFree debt-to-income ratio calculator. Add up your monthly debt payments and gross income to see your DTI, your housing ratio and what a new payment adds.

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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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