Determine your borrowing capacity and assess your financial health with our comprehensive Debt-to-Income (DTI) Ratio calculator. Input three variables to solve for the missing one, instantly providing the key metric lenders use for mortgage qualification.
Mortgage Calculator: Debt-to-Income (DTI) Ratio Solver
Mortgage Debt-to-Income Ratio Formula
Variables
The calculator uses the following variables, allowing you to solve for any single missing value:
- Gross Monthly Income: Your total income before taxes and deductions.
- Total Monthly Debt Payments: Includes credit card minimum payments, auto loans, student loans, and other installment debts.
- Estimated New Monthly Housing Payment: The prospective principal, interest, taxes, insurance (PITI) for the new mortgage.
- Target DTI Ratio (%): The desired or maximum Debt-to-Income ratio, usually a decimal (e.g., 0.36) but entered as a percentage (e.g., 36).
Related Calculators
What is the Mortgage Debt-to-Income Ratio (DTI)?
The Debt-to-Income (DTI) ratio is a crucial metric used by mortgage lenders to assess a borrower’s ability to manage monthly payments and repay debts. It is calculated by dividing your total recurring monthly debt payments (including the proposed mortgage payment) by your gross monthly income. This ratio is expressed as a percentage.
Lenders generally categorize DTI into two parts: the “Front-End Ratio” (just the housing payment) and the “Back-End Ratio” (all debts plus housing). When a mortgage calculator debt ratio is mentioned, it typically refers to the Back-End Ratio. A low DTI ratio (typically under 36% for conventional loans, though higher for FHA/VA) signals to lenders that you have a good balance of debt and income, making you a less risky borrower.
How to Calculate Mortgage DTI (Example)
- Determine Gross Monthly Income: Assume an applicant earns $5,000 per month before taxes.
- Calculate Total Monthly Debt: Applicant has a car loan payment of $300 and minimum credit card payments of $100. Total existing debt is $400.
- Estimate Housing Payment: The estimated new mortgage PITI is $1,100 per month.
- Sum Total Payments: Total payments are $400 (Debt) + $1,100 (Housing) = $1,500.
- Calculate DTI Ratio: $1,500 / $5,000 = 0.30.
- Convert to Percentage: $0.30 \times 100 = 30\%$. The applicant’s DTI is 30%.
Frequently Asked Questions (FAQ)
What is a good DTI ratio for a mortgage?Most conventional lenders prefer a DTI ratio of 36% or less, with no more than 28% devoted to housing costs (front-end ratio). However, some programs, like FHA, may allow DTI ratios as high as 43% to 50%, especially if the borrower has a higher credit score or substantial cash reserves.
Does the DTI calculation use gross or net income?The Debt-to-Income ratio calculation always uses your gross monthly income—your income before any taxes, social security, or other deductions are taken out.
What types of debt are included in the DTI calculation?The calculation includes recurring monthly minimum payments for debts that will appear on your credit report, such as credit card minimums, car loans, student loans, personal loans, and the proposed mortgage payment (PITI).
Can I calculate DTI if I only have two of the required values?No. You need at least three of the four variables (Gross Monthly Income, Total Monthly Debt, Monthly Housing Payment, or Target DTI Ratio) to accurately solve for the missing one using this calculator.