Your Debt-to-Income (DTI) ratio is a key factor lenders use to assess your ability to manage monthly payments and repay debts. It helps determine your eligibility for loans.
Your Debt-to-Income (DTI) Ratio is:
20%
Generally, a DTI ratio of 36% or less is considered good, with 28% or less for housing-related debts. A lower DTI indicates less risk to lenders.
DTI shows the percentage of your gross monthly income that goes toward monthly debt obligations.
Use this formula: DTI (%) = (Total monthly debt payments ÷ Gross monthly income) × 100
DTI (%) = (Total monthly debt payments ÷ Gross monthly income) × 100
Below is a simple example using common monthly figures.
$5,000
$1,200
1,200 ÷ 5,000 = 0.24
0.24 × 100 = 24%
Generally, a DTI of 36% or less is considered good; for housing-related debts, 28% or less is often preferred.
Yes. Include rent or mortgage payments when totaling your monthly debt payments.
Yes. Lenders use DTI to assess repayment ability; a lower DTI improves the likelihood of approval and better terms.
Reduce balances by paying down debt, increase your gross income, or refinance to lower monthly payments to improve your DTI.
