Debt to Income Ratio Calculator
You can use this debt-to-income ratio calculator, also referred to as a DTI calculator, to figure out if you might be at risk of carrying too much debt or if you qualify for a loan of a given size. In general, lenders apply certain rules when evaluating someone that has applied for credit. The calculator performs both front-end, as well as back-end debt-to-income calculations.
The variables used in our online calculator are defined in detail below, including how to interpret the results.
Monthly Debt Payments:
In this first section of the calculator, you are going to enter all of your monthly debt payments, including installment loans and personal loans.
Mortgage Payment ($ / Month)
This is the monthly mortgage payment you make each month; this would include both the repayment of principal, as well as interest charges.
Monthly Rent ($ / Month)
If you don't own a home, and you are paying rent each month, then enter that amount here.
Property Taxes ($ / Month)
If not included in the Mortgage Payment, then you need to estimate or provide the monthly real estate or property taxes if a home is owned.
Homeowner's Insurance Premiums ($ / Month)
These are your existing or estimated monthly insurance premiums, paid on the home and / or its contents.
Car Loans / Lease Payments ($ / Month)
This is the total of all the car loans or car lease payments you make each month.
Personal Loans ($ / Month)
If you have any personal loans, then enter your monthly payment on those loans here.
Credit Cards Minimums ($ / Month)
If you are making minimum payments on a credit card, then enter that amount here because this type of arrangement is similar to a loan. If you're paying off the balance on your credit card each month, then you would not enter that amount here.
Student Loans ($ / Month)
If you have a student loan, then enter your monthly payments in this section of the calculator.
Other Debt ($ / Month)
If you're making any other monthly payment on debt that has not been previously discussed, then enter that amount here. Examples of this type of debt include child support payments and legal judgments.
Sources of Income:
In this section of the calculator you are going to list your annual sources of gross income, before taxes.
Annual Gross Income ($ / Year)
This is your annual household income before any taxes are levied. This annual figure would include base income from all sources, such as the income from a spouse or partner.
Bonuses / Incentives ($ / Year)
This is the total of all annual bonus or incentive payments on a pre-tax basis. This annual figure would include incentives and bonuses received by all sources of household income, including a spouse or partner.
Overtime / Other ($ / Year)
If you have any other reliable source of monthly income, such as overtime, then list it here. Once again, this amount needs to be stated on a before-tax basis.
Monthly Debt Payments ($ / Month)
In this section of the calculator, the Front End, as well as the Back End, debt payments are calculated. The Front End Debt includes principal, interest, taxes and insurance premiums (PITI), while the Back End Debt includes all monthly debt payments.
Total Monthly Income ($ / Month)
This is the total of all your existing sources of monthly income. This is before-tax money you earn each month that can be used to pay off your debt.
Debt to Income Ratio (DTI Ratio)
This calculator provides two debt-to-income calculations. The Front End Ratio is based on the monthly Front End Debt payments divided by the Total Monthly Income. The Back End Ratio is based on the monthly Back End Debt payments divided by the Total Monthly Income.
Credit Risk Assessment
Using the guidelines for conventional loans, scores below 28% (Front End) and 36% (Back End) are still within the conforming loan limits. As each ratio approaches their limit, the score will migrate from "Low" to "Moderate," since a larger share of the household's income will be used to make monthly debt payments. Debt to Income Ratios above 28% (Front End) and 36% (Back End) are deemed "High" risk, and the household should take immediate steps to lower its debt load.
Debt-to-Income Ratio Calculator
Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor. The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.