Debt-to-Income (DTI) Ratio
Understanding Your DTI Ratio
Your Debt-to-Income (DTI) ratio is the percentage of your gross monthly income that goes to paying your monthly debt payments. Lenders use it to determine your ability to manage monthly payments and repay debts.
What to Include:- Monthly Debts: Include rent/mortgage, car loans, student loans, credit card minimum payments, personal loans, and child support/alimony.
- Gross Monthly Income: This is your total income before taxes and other deductions are taken out. Include wages, salaries, freelance income, and any other regular income sources.
Calculation Formula
The Debt-to-Income ratio is calculated with the following formula: $$ DTI (\%) = \frac{\text{Total Monthly Debt Payments}}{\text{Gross Monthly Income}} \times 100 $$
Helpful Resources:
- Consumer Financial Protection Bureau (CFPB). "What is a debt-to-income ratio?". Learn More.
- Investopedia. "Debt-to-Income (DTI) Ratio". Read Article.
FOR EDUCATIONAL USE ONLY
This calculator is for informational purposes only and is not financial advice. Lenders may calculate DTI differently. Consult with a financial advisor for personalized advice.
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