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Debt-to-Income Ratio

Your debt-to-income ratio (DTI) is a simple yet powerful metric that represents the percentage of your monthly income that goes toward paying off debt.

This figure helps lenders assess your ability to manage monthly payments and reflects your overall financial health. Ranges include:

Good:
36% or less

Fair:
37% - 49%

Poor:
50% or higher

A lower DTI can open the door to better interest rates and more flexible loan terms. But a high ratio might limit your borrowing options.

Use the sliders below to estimate your DTI and scroll down to learn more.

Monthly Income

$4000

Include all sources of monthly income before taxes.

Monthly Debt Payments

$1500
$400
$250
$300
$300
$0

Legally required payments like alimony or child support.

Your Debt-to-Income Ratio is 0

Monthly Income: $0

Monthly Debts: $0

Front-End DTI:
*

*

Understanding Debt-to-Income Ratios

Your debt-to-income ratio (DTI) reflects the percentage of your income spent on maintaining your debts. It's expressed in a couple of ways:

  • Back-End Ratio - This is the overall DTI, including all debt payments. It's referred to as simply "debt-to-income ratio" in this calculator.
  • Front-End Ratio - This metric considers only the money you spend on housing costs and is primarily used by mortgage lenders. For conventional loans, a front-end ratio of 28% or less is generally preferred - though exceptions can be made based on various factors and for non-standard mortgages.

Your DTI doesn't directly affect your credit score, but it may influence behaviors that do. For example, if high debt payments hinder your ability to pay bills on time, your credit score could suffer.

DTI and Financial Health
Understanding and maintaining a healthy DTI ratio is fundamental to financial wellness. It helps you:

  • Monitor your debt levels, ensuring they remain manageable relative to your income.
  • Plan for future financial goals without over-leveraging yourself.
  • Maintain flexibility for unforeseen expenses.

To improve your DTI, consider increasing your income or reducing your debts. Explore our resources on budgeting and debt management for details. And remember, if your DTI is high and you're experiencing financial stress, seek the help of a qualified professional.

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