Understanding your debt-to-income ratio is crucial for assessing your financial health and loan eligibility. Our free DTI calculator helps you determine if lenders will view your debt levels as manageable compared to your income, potentially improving your chances of mortgage approval.
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Find out your debt-to-income ratio - a key number for your financial future 🎯
Your ratio needs attention. Action steps:
36% or less: Perfect! You're crushing it 🌟
37-43%: Not bad, but room to improve 💪
Above 43%: Time for a financial glow-up ✨
A debt-to-income ratio is the percentage of your monthly income that goes toward paying debts. It's calculated by dividing your total monthly debt payments by your gross monthly income and multiplying by 100.
DTI ratio is a key metric lenders use to evaluate your creditworthiness, especially for mortgages. A lower DTI ratio suggests you have a good balance between debt and income and may be more likely to qualify for loans.
Generally, lenders prefer a DTI ratio of 43% or less for mortgages, though some may accept up to 50%. A DTI ratio below 35% is considered very good, while anything above 43% might make it harder to qualify for loans.
DTI calculations typically include monthly payments for mortgages, car loans, student loans, credit cards, personal loans, and other debt obligations. Regular expenses like utilities and groceries are not included.
You can lower your DTI ratio by increasing your income, paying off existing debts, avoiding new debt, or refinancing existing debts to lower monthly payments.
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It's good practice to calculate your DTI ratio whenever your income or debt obligations change, or at least every few months if you're planning to apply for a loan.