Debt-to-Income Ratio Calculator
Calculate your debt-to-income ratio to understand your financial health
Additional Information and Definitions
Monthly Income
Enter your total monthly income from all sources before taxes
Monthly Debt Payments
Enter your total monthly debt payments including loans, credit cards, and other obligations
Monthly Housing Costs
Enter your total monthly housing costs including rent or mortgage payments, utilities, and property taxes
Assess Your Financial Stability
Determine your debt-to-income ratio to evaluate your financial health and loan eligibility
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Key Debt-to-Income Ratio Terms
Understand the important terms related to debt-to-income ratio calculations
Debt-to-Income Ratio (DTI):
The percentage of your monthly income that goes toward paying debts. It is calculated by dividing total monthly debt payments by monthly gross income.
Monthly Income:
Your total income earned each month before taxes and other deductions.
Monthly Debt Payments:
The total amount of money you pay each month towards debts, including loans, credit cards, and other financial obligations.
Housing Cost Ratio:
The percentage of your monthly income that goes toward housing costs, such as rent or mortgage payments, utilities, and property taxes.
Financial Health:
A measure of your overall financial stability, which can be assessed by understanding your debt-to-income ratio and other financial metrics.
5 Surprising Facts About Debt-to-Income Ratios
Your debt-to-income ratio is more than just a number. It can reveal important insights about your financial health and loan eligibility.
1.The Loan Approval Secret
Lenders often use your debt-to-income ratio to determine your eligibility for loans. A lower DTI ratio can improve your chances of getting approved.
2.Impact on Credit Score
While your DTI ratio doesn't directly affect your credit score, it can influence your ability to take on new credit and manage existing debts effectively.
3.The 43% Rule
Many lenders follow the 43% rule, which means they generally prefer borrowers with a DTI ratio below 43% when considering mortgage applications.
4.DTI Ratio and Interest Rates
A lower DTI ratio can help you qualify for better interest rates on loans and credit cards, saving you money in the long run.
5.Improving Your DTI Ratio
You can improve your DTI ratio by increasing your income, paying down debt, and managing your expenses more effectively.