Use this Debt-to-Income (DTI) calculator to quickly determine your eligibility for a mortgage or refinance. A lower ratio indicates a stronger financial position for borrowers.
Mortgage Debt to Income Ratio Calculator
Mortgage Debt to Income Ratio Formula
(Total Monthly Debt Payments / Gross Monthly Income) * 100
Total Monthly Debt = Mortgage Payment (PITI) + Other Minimum Debt Payments
Formula Sources: CFPB – Debt-to-Income Ratio, Fannie Mae DTI Guidelines
Variables Explained
- Total Monthly Mortgage Payment (PITI): Includes Principal, Interest, Taxes, and Insurance. This represents your housing debt.
- Other Monthly Debt Payments: The minimum monthly payment for all other debts (credit cards, auto loans, student loans, personal loans, etc.).
- Gross Monthly Income: The total amount of money you earn before any deductions (taxes, insurance, retirement contributions) are taken out.
Related Calculators
Explore other key financial metrics for homeownership planning:
- Mortgage Amortization Calculator
- Front-End DTI Calculator (Housing Only)
- Loan-to-Value (LTV) Ratio Calculator
- Home Affordability Estimator
What is the Mortgage Debt to Income Ratio?
The Debt-to-Income (DTI) ratio is a key metric lenders use to assess your ability to manage monthly payments and repay debts. It is expressed as a percentage of your total monthly debt payments divided by your gross monthly income. For mortgage lending, this is often called the “Back-End” DTI ratio because it includes all debts, not just the proposed mortgage payment.
Most conventional lenders prefer a DTI ratio below 43%, though some government-backed programs (like FHA or VA loans) may accept higher ratios depending on other compensating factors, such as credit score or cash reserves. Understanding your DTI is the first crucial step in the pre-approval process, as it directly influences the loan amount you qualify for.
How to Calculate Mortgage Debt to Income Ratio (Example)
Let’s use an example to walk through the DTI calculation:
- Determine Total Monthly Debt Payments:
- Monthly Mortgage Payment (PITI): $2,200
- Other Debts (Car Loan, Credit Cards): $500
- Total Monthly Debt: $2,200 + $500 = $2,700
- Determine Gross Monthly Income:
- Monthly Salary before taxes: $7,000
- Calculate the DTI Ratio:
- DTI Ratio = ($2,700 / $7,000) * 100
- DTI Ratio = 38.57%
- Interpret the Result: A DTI of 38.57% is generally considered strong and well within the acceptable limits for most mortgage products.
Frequently Asked Questions (FAQ)
What is a good DTI ratio for a mortgage?
Most lenders look for a DTI ratio of 36% or lower, though many qualify borrowers up to 43% (the common limit for conventional loans). A DTI below 30% is considered excellent.
Does DTI include credit card debt?
Yes, the back-end DTI ratio includes the minimum required monthly payments for all revolving debts, including credit cards, auto loans, student loans, and personal loans.
Is Gross or Net income used for DTI?
Lenders use your Gross Monthly Income (your pay before taxes and deductions) for the DTI calculation. This provides a consistent baseline for comparison across all borrowers.
What is the difference between Front-End and Back-End DTI?
Front-End DTI (or Housing Ratio) only includes the monthly housing payment (PITI). Back-End DTI includes the housing payment plus all other minimum monthly debt payments. Lenders typically focus on the Back-End DTI.