Debt Ratio Calculator · Practical guide
What Is a Good Debt-to-Income Ratio?
The classic lender benchmark is 28% of gross income for housing and 36% for all debts combined.
At a glance
Quick answer
A good debt-to-income ratio is 28% or less for housing costs alone (front-end DTI) and 36% or less for all monthly debt payments combined (back-end DTI). Lenders start viewing you as a higher risk once the back-end ratio climbs past 43%.
Interactive tool
Debt Ratio Calculator
Enter your own values, then compare the result with the examples below.
Results
The Benchmark Bands
| Back-end DTI | How lenders see it |
|---|---|
| 36% or less | Good — comfortable approval range |
| 37% to 43% | Caution — approval possible, terms tighten |
| Over 43% | High risk — most conventional loans decline |
A Quick Example
Say you earn $5,000 gross per month and pay $1,200 for housing, $350 for a car, $200 in credit card minimums, $250 in student loans, and $100 in other debts. Your front-end DTI is $1,200 / $5,000 = 24%, and your back-end DTI is $2,100 / $5,000 = 42% — a Caution result: fine on housing, but the total debt load is above the 36% comfort line.
Debt-to-Asset Ratio: The Other Half
This calculator also computes your debt-to-asset ratio — total liabilities divided by total assets. At or below 40% indicates a strong position; above 50% signals that debt outweighs what you own. Someone with $150,000 in assets and $50,000 in liabilities sits at a healthy 33.3%.
How to Improve a High Ratio
- Pay down the debt with the highest monthly payment relative to its balance.
- Avoid new car loans or cards before a mortgage application.
- Document every income source — side income counts if it is consistent.
Frequently Asked Questions
Is DTI based on gross or take-home pay?
Lenders use gross monthly income — your pay before taxes and deductions. This calculator follows the same convention, so enter your pre-tax monthly income.
Do utilities and groceries count in DTI?
No. DTI only includes debt obligations: housing payments, car loans, credit card minimums, student loans, and similar fixed repayments. Living expenses like food, utilities, and insurance are excluded.
What DTI do I need for an FHA loan?
FHA guidelines commonly allow a back-end DTI up to 43%, and sometimes higher with strong compensating factors. That matches the high-risk threshold this calculator uses.
Does rent count toward my DTI?
Yes, if you currently rent, your monthly rent payment is your housing cost for the front-end ratio. Lenders use the proposed mortgage payment instead when evaluating a new loan.