Loading
Powered bySRK CAPITAL
Calculate your debt-to-income ratio to see if you qualify for a mortgage. DTI is one of the most important factors lenders consider when approving your home loan.
Plan your financial future with our suite of mortgage calculators
Debt-to-income ratio compares your monthly debt payments to your gross monthly income. For example, if you earn $6,000/month and pay $2,000 in debts, your DTI is 33%. Lenders use DTI to assess your ability to manage mortgage payments.
Most lenders prefer a DTI below 43% for conventional loans. FHA loans may allow up to 50% with compensating factors. A DTI below 36% is considered excellent and gives you the best loan options and rates.
Front-end DTI (housing ratio) includes only housing costs - mortgage, taxes, insurance. Back-end DTI includes all monthly debts - housing plus car loans, credit cards, student loans, etc. Lenders look at both ratios.
You can lower DTI by: paying off debts, increasing your income, avoiding new debt, or choosing a less expensive home. Even paying off small debts can improve your ratio enough to qualify for a better loan.
Yes, lower DTI can help you qualify for better rates and terms. High DTI signals higher risk to lenders, potentially resulting in higher rates, larger down payment requirements, or loan denial.