Bureau of Wealth

Debt-to-Income Ratio Calculator

By the Bureau of Wealth team Updated

This calculator is general information, not financial advice. Check your own figures with the provider or a qualified adviser before acting on them.

Enter your gross monthly income, your rent or mortgage payment and your other monthly debt payments to see your debt-to-income ratio and the share of income going on housing alone.

Before tax and other deductions.

Other monthly debt payments

Check the highlighted fields to see your results.

What this calculator assumes

  • Income is gross monthly income, before taxes and other deductions. If your income varies, use a typical month.
  • Debt payments are the required monthly payments, such as the minimum on each credit card, not the balances you owe.
  • The housing payment is exactly what you enter. For a mortgage, include property tax, homeowners insurance and any mortgage insurance paid with it so the figure reflects your full monthly cost.
  • Everyday bills such as utilities, groceries and phone plans are not debts and should be left out.
  • Lenders set their own rules for which income and debts count, so their figure can differ from yours.

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How the ratio is worked out

The Consumer Financial Protection Bureau defines your debt-to-income ratio (DTI) as all your monthly debt payments divided by your gross monthly income. The calculator adds your housing payment to every other monthly debt payment you list, divides the total by your gross income, and shows the result as a percentage. It also divides your housing payment alone by your income, which is sometimes called the front-end ratio.

The CFPB describes DTI as one way lenders measure your ability to manage the monthly payments on money you plan to borrow, and notes that different loan products and lenders have different DTI limits.

A worked example

Say you earn $6,000 a month before tax. Your mortgage payment, including property tax and insurance, is $1,500, your car loan is $350 and your credit card minimums add up to $100. Your monthly debt payments total $1,950, so your DTI is 32.5%, and housing alone takes 25% of your income.

If you add a $300 student loan payment, the total becomes $2,250 and your DTI rises to 37.5%. Paying off the car loan as well would bring it back down to 31.7%.

What the 36% and 43% figures mean

For homeowners, the CFPB's debt-to-income worksheet says to consider maintaining a debt-to-income ratio for all debts of 36 percent or less. It adds that some lenders will go up to 43 percent or higher, and that your home mortgage is included in this ratio. The calculator marks results against those two levels.

You may also see 43% linked to Qualified Mortgages. Under the original rule, a General Qualified Mortgage could not have a DTI above 43%. In a final rule issued in December 2020, the CFPB removed that 43% limit from the General QM definition and replaced it with thresholds based on the loan's price. So 43% is a useful reference point, not a hard legal cap, and each lender applies its own limits.

If you rent

The same worksheet gives renters a different guide: a ratio for all debts of 15 to 20 percent or less, with rent left out. To compare yourself with that, enter zero for housing and list only your debt payments. It also suggests a mortgage debt-to-income ratio of 28 to 35 percent for homeowners, which you can check against the housing figure.

If your ratio is higher than you would like, the debt payoff calculator shows how quickly you could clear your debts and free up that share of your income.

Frequently asked questions

What counts as debt in a debt-to-income ratio?

Required monthly payments on your mortgage or rent, car loans, student loans, personal loans and the minimums on credit cards. The CFPB also counts court-ordered fixed payments such as child support. Utilities, phone bills and groceries are not debts, so leave them out.

Should I use gross or net income?

Use gross income, the amount you earn before taxes and other deductions. That is how the CFPB defines the ratio, so using take-home pay would make your ratio look higher than a lender's.

Is a 43% debt-to-income ratio the maximum for a mortgage?

Not under the General Qualified Mortgage rule any more. The CFPB replaced the 43% limit in the General Qualified Mortgage definition with price-based thresholds, and some lenders will go to 43% or higher. Each lender and loan program sets its own limits, so ask the lenders you are considering.

How can I lower my debt-to-income ratio?

Pay down debts to reduce or remove monthly payments, avoid taking on new borrowing before you apply, or increase your income. Clearing a small loan entirely often lowers the ratio faster than paying a little extra on a large one.

Why might a lender get a different ratio?

Lenders set their own rules on which income they can verify and which debts to count, and those rules vary by lender and loan type. Ask the lender how it calculates the figure, then rerun the calculator with the same inputs.

Sources

Figures come from institutions millions of people rely on. How we keep calculators accurate.