A worked example
Someone earning $5,500 a month before tax, with $1,200 in required monthly debt payments, has a DTI of about 21.8%— comfortably in the "strong" range most lenders are happy with. Planning a home purchase? Run the same numbers alongside our Mortgage Calculator to see how a new payment would shift this ratio.
Frequently asked questions
Why does DTI matter so much to lenders?
It's one of the clearest signals of how much room is left in a budget to take on a new payment. A high DTI means a large share of income is already committed to existing debt, which raises the risk of missed payments if income dips or expenses rise.
What debts actually count toward DTI?
Recurring required payments: rent or mortgage, minimum credit card payments, auto loans, student loans and other installment loans. Variable living costs like groceries, utilities, insurance premiums and subscriptions are not part of the calculation.
Is there one universal cutoff for a 'good' DTI?
No — different loan types and lenders set different limits. Many conventional mortgage lenders look for 43% or below, some loan programs allow higher with compensating factors, and lower is generally better for approval odds and interest rate offered.
How do I actually lower my DTI?
Either pay down or pay off existing debt (lowering the numerator) or increase income (raising the denominator) — paying off a smaller loan entirely, even if it's not the highest-interest one, often moves DTI more than paying down a larger balance partially.
This calculator provides general estimates only and is not a lending decision. Individual lenders set their own thresholds and may weigh other factors alongside DTI.