Divide your total monthly debt payments by your gross monthly income, then multiply by 100. If you pay 1,500 in monthly debts on 5,000 of gross income, that is 1,500 / 5,000 = 0.30, a 30 percent DTI. A free debt-to-income calculator does the division in your browser.
DTI = (total monthly debt payments / gross monthly income) x 100. Monthly debts typically include loan and credit card minimums, car payments and housing costs, while everyday spending like groceries and utilities is not counted. Income is gross, before tax. As an example, 1,500 of monthly debt on 5,000 gross income is a 30 percent DTI.
Lenders use DTI to judge whether you can take on more debt, since a lower ratio means more income is free after existing obligations. Guidelines vary by lender and product, so there is no single universal cutoff, but a lower DTI generally strengthens an application. Lowering it means either reducing monthly debt payments or increasing income, and the calculator shows how each change moves the ratio.
30 percent, from 1,500 divided by 5,000 times 100.
Gross income, before taxes and deductions, is the standard basis for the ratio.
Recurring debt obligations like loan, car and credit card minimums and housing payments. Regular living expenses such as groceries are not included.