Debt-to-Income Ratio Calculator

A debt-to-income (DTI) ratio is the percentage of your monthly income that goes toward debt. Lenders use your DTI to see how you manage monthly payments and to determine whether or not to loan you money.

Now that you know how a debt-to-income ratio is calculated, you might be wondering what lenders think of your score. Each lender has their own idea of what qualifies as a good DTI, but here’s a breakdown of the general industry standards.

DTI of 36% or less: Lenders view a DTI of 36% or under as good, meaning they think you can manage your current debt payments and handle taking on an additional loan.

DTI of 37–43%: In this range, lenders get nervous that adding another loan payment to your plate might be challenging, especially if an emergency pops up. You won’t necessarily get turned down for another loan, but lenders will proceed with caution.

DTI of 44–50%: When your DTI gets to this level, you’re almost too risky for lenders. You might get approved for smaller loans, but not a mortgage.

DTI of 51% or higher: At this point, you’re in the danger zone, and lenders probably won’t lend you money. With a DTI over 50%, that means over half of your monthly income is going toward debt. After covering living expenses, like groceries and insurance, there’s not much left for saving or covering an emergency—and another loan could tip you over the edge.

But listen, just because your DTI is considered good by industry standards and you qualify for another loan, it doesn’t mean you should borrow more money. Debt steals from you now and in the future. Your income is your most important wealth-building tool, and when it's all going toward debt, it's hard to get ahead with your money.

Bottom line? The best DTI is 0%. So don’t focus so much on your number—focus on paying off your debt.

When applying for a mortgage, lenders will look at two different types of DTI ratios: a front-end ratio and a back-end ratio.

Front-end ratio: A front-end ratio only includes your total monthly housing costs—like your rent, mortgage payment, monthly homeowners association fees, property taxes and homeowners insurance.

Lenders prefer your max front-end ratio to be 28% or lower. But we recommend you keep your total housing costs to no more than 25% of your take-home pay to avoid becoming what’s known as “house poor.”

Back-end ratio: A back-end ratio (which is what our DTI Ratio Calculator above gives you) includes your monthly housing costs plus any other monthly debt payments you have, like credit cards, student loans or medical bills. Lenders typically care more about the back-end ratio because it gives them a better picture of your average monthly payments.

Every mortgage lender has their own DTI limits. For example, the Federal Housing Administration (FHA) allows you to have a front-end ratio of 31% and a back-end ratio of 43% to qualify for an FHA loan.¹

If your blood pressure shot up when you saw your DTI, take a deep breath. You actually have more control over that number than you might think!

The key to lowering your DTI is to decrease your monthly debt or increase your monthly income. Or better yet, both! Here’s what you can do to lower your debt-to-income ratio.

The brand-new car that’s calling your name? That boat you’ve been eyeing for years? You’re just a loan or two away from making them “yours.” Nope, hold it right there! Borrowing more money will just make your DTI percentage rise (and also your stress level). You may be tempted to add more payments to your plate, but you should really be working to get rid of the payments you already have.

Pick up a few extra hours at work. Snag a side hustle. Ask for a raise. Anything you can do to get more money coming in each month will help lower your DTI. But don’t just earn more money for the sake of improving your debt-to-income ratio. Use that extra cash to pay off your debt too!

Minimum payments equal minimal progress. Seriously, if you’re only paying your minimum payments on your debts each month, those balances will hang around forever. And nobody wants that. To pay off debt faster, start by tackling your smallest debt first—not the one with the highest interest rate (we call this the debt snowball method). When you use the debt snowball method, you’ll get quick wins and see progress right away. And that’ll motivate you to pay off the rest of your debt even faster.

Downloading a budgeting app (like EveryDollar) won’t make your DTI ratio magically shrink. But what a budget will do is help you visually see where your money is going each month and track where you’re overspending. If you cut back in those areas, you’ll have more money to throw at your debt every single month—which will lower your DTI (and get you closer to a life without debt holding you back).

A lot of companies will say that keeping your debt at a level you can manage is a sign of good financial health. But let’s be honest. Even if your DTI ratio is considered good, that still means over a third of your paycheck is going to stuff you don’t own. Sure, it might be “manageable” by a lender’s standards, but do you really want that much of your paycheck going in someone else’s pocket?

The truth is, lenders aren’t helping you out by accepting your loan application. The interest you pay on the loan is actually helping them out. You continue to feel like the current is pulling you under, and they profit off you staying there.

So, don’t ask, “Can I take on another payment?” Instead, ask, “Do I want to be even more strapped than I am right now?”

Just think. If you didn’t have any of those payments at all, how much more breathing room would you have in your finances? In your life?

The real sign of financial health (and freedom!) is you being in control of your money—100% of your paycheck going into your account—so you can save more, spend without worry, and build the future you really want. Without owing anyone a thing.