What DTI means
Your debt-to-income ratio is the share of your gross monthly income that goes to debt payments. Lenders use it to judge whether you can take on more borrowing.
The calculation
DTI = monthly debt payments / gross monthly income x 100. The tool shows your current ratio and the ratio after adding the new payment.
Example
With $5,000 gross income and $1,200 of monthly debts, DTI is 24%. Adding a $400 loan payment lifts it to 32%.
Common guidelines
Many lenders prefer ratios of about 36% or less, and some accept higher with strong credit. Limits differ by lender and loan type, so treat these as rough guides.
Lowering your DTI
Pay down balances, avoid new debt before applying, and look for ways to raise income.
Frequently asked questions
Which debts count?
Typically loan, card minimum, mortgage or rent and other recurring debt payments.
Gross or net income?
Lenders normally use gross income, before tax.
What is a good DTI?
Lower is better. Many lenders look for roughly 36% or less.