Debt-to-Income Ratio Calculator

What formula does this tool use?

This tool uses DTI = monthly debt payments ÷ gross monthly income × 100. The back-end ratio divides the sum of all five payment fields (housing, car, student loan, card minimums, other) by income, and the front-end ratio divides only the housing field by income. On the starting values, $2,200 of payments against $6,000 of income gives 36.7% back-end and 25.0% front-end.

Are the 28% and 36% figures and the bands lending rules?

No. The 28% housing line, the 36% total-debt line and the cut-offs at 20%, 35% and 50% are figures built into this tool, used only to sort your result into a band. Real lenders set their own limits, which differ by lender and loan type and change over time, so the lender or an adviser governs what applies to you.

Why can the band disagree with the rounded percentage?

The band is chosen from the unrounded ratio and the display is rounded to one decimal. With $3,504 of payments on $10,000 of income the ratio is 35.04%, shown as 35.0% but placed in the “Over 35% up to 50%” band. Exactly 35% falls in the lower band.

Which payments should go in which box?

The housing box takes your mortgage or rent, whichever you want measured; the tool cannot tell whether that figure includes property tax or insurance. Put car, student-loan and card minimums in their own boxes and any other recurring debt payment in “Other”. The tool simply adds what you type and does not check whether an item is a debt.

Is the income gross or net?

Gross, meaning before tax and deductions, and monthly. If you know only an annual figure, divide it by 12 first. The tool applies no adjustment for variable, bonus or part-year income, and it does not combine two incomes unless you enter the combined total.

What happens if income is 0, or an amount box is cleared?

With an income of 0 the ratios cannot be computed, so the tool shows “n/a” instead of a percentage. A debt box set to 0 is used as zero. A cleared box counts as 0, because the page turns an empty number box into 0, so it does not return to its starting value. Negative numbers are treated as 0.

What does “Room Under the 36% Line” mean?

It is 36% of your income minus your total monthly payments. A positive number is how much more monthly payment would fit under that built-in line, and a minus sign means you are over it. On the starting values the figure is −$40.00, because $2,200 exceeds the $2,160 line.

Does this predict whether a loan will be approved?

No. A lender also looks at credit history, savings, employment, the property or purchase and its own policy, none of which this tool sees. The output is a ratio and a band for the numbers you typed, not a decision.