Debt-to-Income Ratio Calculator

Debt-to-Income Ratio Calculator

A Debt-to-Income Ratio (DTI) Calculator is a vital tool for assessing financial health and loan eligibility by measuring the percentage of your monthly income that goes toward debt payments. By inputting gross monthly income and total monthly debt payments (e.g., mortgage, car loans, credit cards, student loans), it calculates your DTI, helping you understand affordability for new loans or home purchases.

The DTI formula is: DTI = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100. For example, if you earn $6,000 monthly and have $1,800 in debt payments, your DTI is 30%. Lenders typically prefer a DTI below 36%, with housing costs (like mortgage or rent) not exceeding 28%, to approve loans.

Benefits include evaluating loan eligibility, identifying overextension risks, and planning debt reduction. A lower DTI improves chances of securing favorable loan terms. Some calculators include future loan payments to simulate affordability.

For accurate results, list all debts, including minimum credit card payments, and verify income. Test scenarios by reducing debts or increasing income to improve DTI. Consult lenders for personalized advice. A Debt-to-Income Ratio Calculator empowers smarter financial decisions, ensuring borrowing aligns with your budget. Calculate your DTI today to gauge your financial readiness!