Calculate your debt-to-income (DTI) ratio to see where you stand. Lenders use this key metric to evaluate your ability to manage monthly payments and qualify for loans.
Before taxes and deductions
Monthly Debt Payments
Personal loans, child support, etc.
Debt-to-Income Ratio
38.0%
Rating
Acceptable
Total Monthly Debt
$1,900.00
Remaining Income
$3,100.00
DTI Guidelines
Most lenders require a DTI of 43% or lower for mortgage approval.
How your DTI affects your eligibility for common loan types
Most conventional lenders require DTI at or below 43%. Below 36% gets you better rates.
Max DTI: 43% | Ideal: 36%
FHA loans allow higher DTI up to 50% with compensating factors like good credit or savings.
Max DTI: 50% | Ideal: 43%
VA loans generally use 41% as the guideline, though exceptions can be made for strong applicants.
Max DTI: 41% | Ideal: 36%
Most personal lenders prefer DTI below 40%. Lower ratios unlock better interest rates.
Max DTI: 40% | Ideal: 35%
Your DTI of 38.0% is above the ideal 36%. Here's how to lower it.
Pay Down Debt
Reduce your monthly debt payments by $100 to reach a 36% DTI. Focus on paying off the highest-payment debts first.
Increase Income
Alternatively, increasing your gross monthly income by $278 would bring your DTI to 36%.
Avoid New Debt
Hold off on taking new loans or opening new credit lines before applying for a mortgage. Each new obligation increases your DTI.
Refinance Existing Loans
Refinancing to a longer term can lower monthly payments and reduce your DTI, though you may pay more interest over time.
Your debt-to-income ratio is calculated by dividing your total monthly debt payments by your gross monthly income. For example, if you pay $2,000/month in debts and earn $6,000/month before taxes, your DTI is 33%. Lenders use this ratio — along with your credit score and down payment — to determine how much you can afford to borrow. A lower DTI signals to lenders that you have a healthy balance between debt and income, making you a less risky borrower.
A DTI of 35% or lower is considered good by most lenders. A DTI of 20% or below is excellent. For conventional mortgage approval, most lenders look for a DTI of 43% or less, though some programs allow up to 50%.
You can lower your DTI by paying down existing debts (especially high-interest credit cards), avoiding new debt, increasing your income through raises or side work, or refinancing loans to lower monthly payments.
When applying for a mortgage, your current rent is typically not included since it will be replaced by the mortgage payment. However, if you'll continue renting (e.g., for an investment property purchase), lenders may include it.
DTI includes recurring monthly debt obligations: mortgage or rent, car payments, student loans, credit card minimum payments, personal loans, child support, and alimony. It does not include utilities, groceries, insurance, or subscriptions.
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