Debt-to-income ratio compares qualifying monthly debt payments with gross monthly income. For a basic illustration, divide monthly debts by gross income and multiply by 100. Lenders may calculate qualifying income and obligations differently from a household’s rough estimate.
Use DTI to prepare questions, not to self-approve a mortgage.
Use monthly numbers consistently
Include the proposed housing payment and recurring debt obligations in the illustration. Convert income to a consistent monthly basis. Variable, bonus, self-employment, and rental income often need a lender’s specific calculation rather than a simple monthly average.
Recognize what the ratio is not
DTI is not a complete living-expense budget. Groceries, childcare, savings goals, and utilities can be significant even when they are not treated as monthly debt. Use the ratio alongside a take-home-pay budget.
Avoid a universal pass or fail
Different products and lenders use different requirements and compensating factors. A result from an educational calculator is not an approval, denial, or prediction of the maximum loan you can obtain.
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CFPB: Debt-to-income ratio ↗General education, not an approval or personalized recommendation. Loan terms and eligibility vary. Our editorial standards.