Calculate your Debt-to-Income ratio to see if you qualify for a mortgage
Total housing payment including principal, interest, taxes, insurance, and HOA fees
Car loans, credit cards, student loans, personal loans (minimum payments)
Total income before taxes and deductions
Your Debt-to-Income (DTI) ratio is one of the most important factors lenders consider when evaluating your mortgage application. It's a simple percentage that compares your monthly debt obligations to your gross monthly income (income before taxes and deductions).
Formula: DTI = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100
This ratio only considers your housing expenses: principal, interest, property taxes, insurance, and HOA fees.
Formula: Housing Expenses ÷ Gross Monthly Income × 100
Preferred Range: Most lenders prefer 28% or less
This ratio includes ALL your monthly debt obligations: housing expenses plus car loans, credit cards, student loans, personal loans, and any other recurring debt payments.
Formula: (Housing Expenses + Other Debts) ÷ Gross Monthly Income × 100
Preferred Range: Most lenders prefer 43% or less
Risk Assessment: Lenders use DTI to evaluate how much debt you can reasonably handle
Loan Approval: A lower DTI increases your chances of approval and may qualify you for better rates
Financial Health: A lower DTI means more financial flexibility for savings, emergencies, and lifestyle
Interest Rates: Borrowers with lower DTI ratios often qualify for lower interest rates
Pay Down Debt: Focus on paying off high-interest debts like credit cards first
Increase Income: Take on a side job, ask for a raise, or add a co-borrower with income
Avoid New Debt: Don't take on new loans or credit cards before applying for a mortgage
Consider a Larger Down Payment: This reduces your loan amount and monthly mortgage payment
Wait to Buy: If your DTI is too high, spend a few months paying down debt before applying
Remember: These are general guidelines. Lenders consider many factors beyond DTI, including credit score, employment history, assets, and loan type. Consult with a qualified mortgage professional to understand your specific situation.