What the debt-to-income ratio measures
Your debt-to-income ratio, or DTI, is the slice of your gross monthly income that already goes to debt payments. The calculation is simple: divide your total monthly debt payments by your gross (pre-tax) monthly income and express it as a percentage.
Lenders lean on this number heavily. It signals how much room you have in your budget to take on a new payment, which is why it strongly influences mortgage and loan approvals — often more than your credit score alone.
How lenders read your number
As a common rule of thumb, lenders treat 36% or below as comfortable, view 37% to 43% with some caution, and consider anything above 43% as high — a level where qualifying for new credit gets harder. Many mortgage programs use 43% as a key ceiling.
The donut chart shows your debt payments alongside the income you have left after them, making it easy to see how much of your paycheck is already committed.
Lowering your DTI
You can improve the ratio from either side of the fraction:
- Pay down balances — especially small ones you can eliminate entirely — to remove their monthly payments.
- Avoid taking on new loans or large purchases in the months before applying for credit.
- Increase qualifying income where you can, since the ratio falls as income rises.
- Use gross income and include all recurring obligations so the figure matches what a lender will calculate.
Front-end vs. back-end, and a caveat
Lenders sometimes distinguish the front-end ratio (housing costs only) from the back-end ratio (all debts), which is what this tool computes. Guidelines vary by lender and loan type, so treat the categories here as general benchmarks rather than a guarantee of approval.
Formula
DTI = monthlyDebtPayments / grossMonthlyIncome × 100Frequently asked questions
- Which debts should I include?
- Include recurring debt such as mortgage or rent, auto and student loans, and minimum credit card payments. Use gross (pre-tax) income for the ratio.