Debt to Income (DTI) Calculator

A Debt to Income (DTI) Ratio is a financial metric used by lenders to assess a borrower's ability to manage debt payments. It is calculated by dividing the borrower's monthly debt obligations by their gross monthly income.

For example, if a borrower has $1,500 in monthly debt payments and a gross monthly income of $5,000, their DTI ratio would be 30% ($1,500 divided by $5,000).

A lower DTI ratio is generally viewed as a positive indicator of a borrower's financial health and ability to manage debt payments. Lenders typically use DTI ratios as part of the loan approval process to determine the borrower's creditworthiness and ability to repay the loan.

Different lenders may have different DTI ratio requirements based on the type of loan being offered and other factors, but generally, a DTI ratio of 43% or lower is considered acceptable for most loans.

Knowing your Debt to Income (DTI) Ratio can help you understand your overall financial health and borrowing capacity.

If your DTI ratio is too high, it can indicate that you are carrying too much debt relative to your income, which may make it difficult to secure new loans or credit. It can also be a warning sign that you may be at risk of financial hardship if unexpected expenses arise.

On the other hand, if your DTI ratio is low, it can indicate that you have a healthy financial profile and may be able to qualify for more favorable loan terms and interest rates.

By calculating your DTI ratio, you can also identify areas where you may be able to improve your financial situation, such as paying off high-interest debt or increasing your income.

generally you want to keep your DTI below 45%. Above 45% some bad things may start occurring. Including being rejected from future loans you may need as well as starting to struggle to pay your bills each month