Debt-to-Income Ratio Calculator

Excellent: under 20%. Good: 20–35%. Fair: 36–43%. High: 44–50%. Very high: above 50%. For mortgage qualification: conventional loans typically require back-end DTI under 43% (Fannie Mae/Freddie Mac). FHA allows up to 43–50% with compensating factors. VA loans have no official DTI limit but lenders typically cap at 41%. The lower, the better — lenders offer better rates to borrowers with lower DTI.

Add all monthly debt payments: mortgage/rent + car loans + student loans + credit card minimum payments + personal loans + any other obligated monthly debts. Divide by gross monthly income (before taxes). Multiply by 100 for the percentage. Example: $2,300 monthly debts / $6,000 gross income = 38.3% DTI. Note: use gross income (before taxes), not net take-home pay.

Yes, rental income can offset DTI. Most lenders credit 75% of gross rental income (to account for vacancy and expenses). If you own rental property, the mortgage, taxes, insurance, and HOA for that property count as debts in DTI. Net rental income (75% rent - expenses) is added to qualifying income. Investment properties require documentation: lease agreements, 2 years of Schedule E tax returns.

Yes, but documentation requirements are stricter. Lenders typically use a 2-year average of net self-employment income from tax returns (Schedule C or K-1). If income is declining year-over-year, the lower year may be used. Business expenses reduce qualifying income significantly. Self-employed borrowers often use bank statement loans (12–24 months of bank statements averaged) instead of traditional income documentation.

It's very difficult with conventional loans, which cap at 43–45% with strong compensating factors (large down payment, excellent credit, significant reserves). FHA allows up to 50% DTI in some cases. Non-QM (non-qualified mortgage) lenders may approve higher DTIs but charge significantly higher rates. The better strategy: pay down debt before applying. Even reducing DTI from 47% to 43% can open conventional loan eligibility.

Quick wins: Pay off installment loans with small remaining balances (even $3,000 remaining may have $200+/month payment). Don't open new credit cards or take auto loans before applying for a mortgage. Avoid any financing for 6–12 months before major loan applications. Longer-term: increase income, aggressively pay down revolving debt. Refinancing high-payment auto loans to lower rates reduces monthly obligation. Consolidating multiple credit cards into one personal loan can reduce minimum payment total.

Yes. If student loans are in deferment, lenders still count a payment in DTI. Conventional: use 1% of outstanding balance per month as the payment. FHA: uses 0.5–1% of balance. IBR (Income-Based Repayment) actual payment is used by some lenders. This can significantly affect DTI for large student loan balances. Entering repayment before applying for a mortgage sometimes helps if actual payment is lower than the 1% calculation.

The following are NOT counted in DTI: utilities (electric, gas, water, internet), cell phone bill, groceries and food, insurance (health, auto, life — unless it's a debt obligation), subscriptions (streaming, gym, etc.), daycare and childcare (some lenders do include this). Only legally obligated monthly debt payments are included. Future obligations (a car you plan to buy) are not included until the loan exists.

If you co-sign a loan, that payment counts in your DTI even if the primary borrower makes every payment. You're legally obligated. This can significantly impact your ability to get your own mortgage. Exception: if the primary borrower has made 12+ months of on-time payments and you can document this, some lenders will exclude the co-signed debt from your DTI. Best practice: avoid co-signing if you plan to apply for a major loan within 12–24 months.

A Qualified Mortgage (QM) is a category created by the Consumer Financial Protection Bureau (CFPB) under the Dodd-Frank Act. QMs require lenders to verify the borrower's ability to repay. Key QM features: DTI generally capped at 43% (with exceptions for loans eligible for Fannie Mae/Freddie Mac), no negative amortization, no balloon payments (mostly), loan term max 30 years, points and fees capped. QMs protect lenders from certain legal liability. Non-QM loans exist for borrowers who don't qualify but typically carry higher rates.