Debt-to-Income Ratio Calculator

How to calculate your debt-to-income ratio

Your debt-to-income ratio is every monthly debt payment divided by your gross monthly income, expressed as a percentage. Gross is the part people get wrong. It means your pay before tax and before deductions, including steady non-taxable income, because that is the number a lender pulls off your pay stubs and tax returns. Run the calculation on take-home pay and your ratio will come out several points worse than the one the lender computes on the same debts.

There are two ratios, not one, and most calculators only give you the blended version. The front-end ratio is housing alone against gross income. The back-end ratio is housing plus every other monthly obligation. Splitting them matters because they fail for different reasons and they have different fixes: a front-end problem is a house problem, a back-end problem is usually a car and a credit card problem.

The CFPB's worked example: a $1,500 mortgage, a $100 auto payment and $400 of other debt payments come to $2,000 a month. Against $6,000 of gross monthly income, that is a 33% back-end ratio and a 25% front-end ratio. Both sit inside the 28/36 guideline, which is the point of the example.

What counts: rent or mortgage (for a mortgage, the full PITI figure of principal, interest, taxes and insurance, plus PMI and HOA dues), auto loans, student loans, credit card minimum payments, personal loans, and court-ordered child support or alimony. Rent counts even though rent is not debt, because a lender treats it as an obligation like any other.

What does not count: utilities, groceries, gas, phone, cable and streaming, health and auto insurance premiums paid outside an escrowed housing payment, income tax, and payroll deductions such as 401(k) contributions. Groceries are missing from DTI on purpose. DTI measures obligations a lender can enforce against you, not what it costs to live. So you can pass on paper and still run out of money by the 20th.

The 28/36 rule, and what lenders actually allow

The 28/36 rule says housing should stay at or below 28% of gross monthly income and total debt payments at or below 36%. It is a budgeting heuristic, not a lending law, and no underwriter is going to decline you at 36.4%. Its usefulness is as a target you set for yourself, and the 36% number is better grounded than it looks: it is also Fannie Mae's baseline maximum for manually underwritten conventional loans.

The real limits sit higher. Conventional casefiles run through Fannie Mae's Desktop Underwriter allow a DTI up to 50%. Manually underwritten conventional loans start at 36% and stretch to 45% when the borrower meets the credit score and reserve requirements in the Eligibility Matrix. FHA's standard is 31% front-end and 43% back-end, and roughly 40/50 with documented compensating factors such as cash reserves or minimal payment shock. VA publishes a 41% back-end guideline, but its real gate is the residual income test, the dollars left over after every obligation and typical living expenses, which is why VA loans routinely close well above 41%.

One correction worth making, because most of the pages ranking for this term still get it wrong: 43% is no longer the qualified mortgage limit. The CFPB's General QM final rule removed the 43% DTI cap and replaced it with price-based thresholds. A first-lien loan now qualifies where its APR does not exceed the average prime offer rate for a comparable transaction by more than 1.5 percentage points (3.5 points for subordinate liens), with mandatory compliance from October 1, 2022. The 43% figure survives as FHA's standard back-end guideline and as a common lender overlay, so it is still a number you will meet. It is just not the QM line any more.

Every one of those numbers answers a question about approval, though, and approval is not affordability. The maximum you can be approved for and the maximum that leaves you a month you can live in are different numbers, and the gap between them is where DTI stops being useful. At 50% of gross committed to debt, you have a mortgage and no margin.

Two ways to fix a DTI that is too high

The fraction has two levers, and this page prices both. On the cut side, the figure to watch is the monthly payment, not the balance. DTI does not care what you owe, only what you pay each month, so the debt to attack first is the one with the highest payment relative to its remaining balance. Clearing a small personal loan outright often moves your ratio more than paying thousands off a mortgage, because the whole payment disappears from the numerator at once. If you need to find the cash to do it, the subscription cost calculator is a good place to look. Subscriptions do not count toward DTI at all, which makes them exactly the spending you can redirect into the payment cut this page just calculated.

On the income side, the annualized figure is the one to act on. It converts a vague "earn more" into a raise you can ask for, a side income target, or the case for adding a co-borrower whose income joins the denominator. If your income varies month to month, feed the calculator a conservative figure rather than your best month: the irregular income budget calculator works out a baseline you can defend, and the biweekly paycheck budget calculator converts pay-period income into the monthly number this page needs.

There is a third lever this calculator deliberately does not model. Refinancing or extending a loan term lowers the monthly payment, which lowers DTI, without reducing a dollar of what you owe. It helps the ratio and costs you more in total interest, so treat it as a qualification tactic rather than a debt strategy. Cash reserves are the other thing to build, since they are one of the compensating factors that let a lender approve above guideline: the savings goal calculator will size the target and the monthly contribution.

Keeping the numbers current after you close

A DTI is only as good as the payment list behind it, and that list changes constantly. A card minimum moves with the balance, a loan gets paid off, a new one appears. Recalculate from a stale list and you are making decisions on a ratio that was true three months ago.

Budget44 holds credit cards and loans as liability accounts, so charge and payment transactions keep each balance current as you record them, and the net worth screen shows assets against liabilities in one place. Recurring bills carry the monthly payments on six cadences, which is the list this calculator asks for. Everything stays on the device: no account, no bank login, no sync, and amounts are stored as integer minor units so the totals reconcile to the cent.

You have the ratio. The harder part is keeping it honest six months from now. Track every liability in Budget44 and the payment list behind it stays current as you record each charge and payment.