DTI Calculator
Calculate your Debt-to-Income ratio with QM 43% and Non-QM 50% thresholds. Stress testing, reverse calculation, and 7 loan types supported.
Actual lending criteria may vary by financial institution.
Enter your income and loan details to automatically calculate your DTI ratio.
- Enter your annual income and existing debt information
- Set new loan terms to automatically calculate your DTI
- Use the Reverse tab to find your maximum borrowing capacity
| Loan Type | Amount | Rate | Term | Repayment | Annual Payment | DTI Impact |
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Actual DTI requirements may vary by lender. This calculator provides estimates only.
When stress rates are applied, actual borrowing limits may be reduced.
What is DTI (Debt-to-Income Ratio)?
The Debt-to-Income (DTI) ratio is a key financial metric that measures the percentage of your gross monthly income that goes toward paying your monthly debt obligations. Lenders use the DTI ratio to evaluate your ability to manage monthly payments and repay debts.
DTI Calculation Formula
DTI (%) = (Total Annual Debt Payments / Gross Annual Income) x 100
For example, if your annual income is $75,000 and your total annual debt payments are $30,000, your DTI ratio is 40%. Under the Qualified Mortgage (QM) rule established by the Consumer Financial Protection Bureau (CFPB), lenders generally require a DTI ratio of 43% or less for qualified mortgages.
Why DTI Matters
- Mortgage Approval: DTI is one of the most important factors lenders consider when approving mortgage applications.
- Interest Rate Impact: A lower DTI may qualify you for better interest rates and loan terms.
- Financial Health Indicator: DTI helps assess whether you can comfortably take on additional debt without financial strain.
Who Should Use This Calculator
- Home Buyers: Determine how much mortgage you can qualify for based on your income and existing debts
- Refinancers: Check if you meet DTI requirements to refinance your existing mortgage at a better rate
- Multiple Debt Holders: Understand how student loans, auto loans, and credit card debt affect your borrowing capacity
- Pre-Approval Preparers: Get a clear picture of your DTI before applying for a mortgage pre-approval
- Real Estate Investors: Calculate your maximum borrowing power for investment property purchases
Key Features
- Comprehensive DTI Calculation: Supports 7 loan types including Mortgage, Personal Loan, HELOC, Auto Loan, Student Loan, Credit Card, and Line of Credit for accurate DTI assessment.
- Stress Test Buffer: Apply Conservative (+2%) or Moderate (+1%) rate buffers to stress-test your DTI against potential rate increases. Fixed, variable, and hybrid rate types are factored accordingly.
- Reverse Calculator (Max Loan): Set a target DTI (43% QM or 50% Non-QM) and the calculator automatically determines the maximum loan amount you can qualify for.
- Real-Time Auto-Calculation: Results update instantly with debounced input processing for a smooth user experience.
- Visual Gauge and Limit Bars: A semicircular gauge provides an at-a-glance DTI level, while progress bars compare your DTI against QM and Non-QM thresholds.
- Detailed Loan Breakdown: A table shows each loan’s annual payment and its DTI contribution, helping you identify which debts have the greatest impact.
How to Use
DTI Calculation Tab
- Enter Annual Income: Input your gross annual income before taxes. Use the quick buttons for common amounts.
- Select Stress Buffer: Choose Conservative (+2%) or Moderate (+1%) to factor in potential rate increases.
- Add Existing Debts: Click “Add Existing Debt” to enter your current loans. Selecting a loan type auto-fills typical rates, terms, and repayment methods.
- Set New Loan Details: Enter the amount, rate, term, repayment method, and rate type for the loan you are considering.
- Review Results: Check your DTI on the gauge, compare against QM/Non-QM limits, and review the detailed breakdown table.
Reverse (Max Loan) Tab
- Verify Income: Your income from the DTI Calculation tab is automatically synced.
- Check Existing Payments: The total annual payment from existing debts is auto-calculated.
- Set Target DTI: Choose 43% (QM), 50% (Non-QM), or enter a custom percentage.
- Configure New Loan Terms: Set the expected rate, term, repayment method, and rate type.
- View Maximum Loan: See your maximum borrowing capacity under both base and stress scenarios, along with estimated monthly payments.
DTI Rules and Details
Qualified Mortgage (QM) Rule
The Consumer Financial Protection Bureau (CFPB) established the Qualified Mortgage rule to ensure borrowers can reasonably afford their mortgages. Key points include:
- QM DTI Limit (43%): For a loan to be classified as a Qualified Mortgage, the borrower’s DTI ratio generally should not exceed 43%.
- Non-QM Loans (50%+): Some lenders offer Non-QM loans with higher DTI thresholds (up to 50% or more), but these may come with higher rates.
- Exceptions: FHA loans may allow DTI up to 57% in some cases; VA loans have no strict DTI cap but use residual income analysis.
Front-End vs. Back-End DTI
- Front-End DTI: Only includes housing-related costs (mortgage payment, property taxes, insurance). Lenders typically look for 28% or less.
- Back-End DTI: Includes all monthly debt obligations (housing + auto loans, student loans, credit cards, etc.). This is what the 43% QM rule applies to, and what this calculator computes.
Loan Types Explained
- Fixed Payment (Amortized): Equal monthly payments of principal and interest over the loan term. The most common repayment method.
- Equal Principal: Fixed principal payments each month plus declining interest. Higher initial payments but lower total interest cost.
- Interest Only: Pay only interest during the loan term with a balloon principal payment at maturity. Lower monthly payments but full principal due at the end.
How to Lower Your DTI
- Pay Off High-Rate Debt: Prioritize paying off credit cards and personal loans with the highest interest rates.
- Extend Loan Terms: Choosing a longer repayment period reduces your annual payment amount.
- Increase Income: Document all income sources including side income, rental income, and investments.
- Avoid New Debt: Refrain from taking on new debt before applying for a mortgage.
- Refinance Existing Loans: Consolidate or refinance high-rate loans to lower rates to reduce monthly payments.
Frequently Asked Questions
What is the difference between QM and Non-QM DTI limits?
Qualified Mortgage (QM) loans follow CFPB guidelines with a general DTI limit of 43%. These loans offer borrower protections and are considered safer for both lenders and borrowers. Non-QM loans can exceed the 43% threshold (often up to 50% or more) but typically come with higher interest rates and fewer consumer protections. For example, with a $100,000 annual income, a QM loan limits your total annual debt payments to $43,000, while a Non-QM lender might allow up to $50,000.
What debts are included in DTI calculation?
Back-end DTI includes all recurring monthly debt obligations: mortgage or rent payments, auto loans, student loans, credit card minimum payments, personal loans, HELOCs, child support, alimony, and any other installment or revolving debt. It does not include utilities, groceries, insurance premiums (unless bundled with mortgage), or discretionary spending. Credit card debt is calculated based on the minimum monthly payment, not the total balance.
How does credit card debt affect my DTI?
Credit card debt has an outsized impact on DTI because of high interest rates (typically 18-25% APR). Even a relatively small balance can generate significant minimum payments. For example, a $10,000 credit card balance at 22% APR with a 3-year repayment plan results in roughly $4,700 in annual payments. Paying off credit card debt before applying for a mortgage can significantly improve your DTI ratio and increase your borrowing capacity.
How can I lower my DTI ratio?
There are several strategies to lower your DTI: First, pay off high-interest debt like credit cards and personal loans. Second, avoid taking on new debt before applying for a mortgage. Third, consider extending loan terms to reduce monthly payments. Fourth, increase your documented income by including all sources (rental income, side business, etc.). Fifth, refinance existing high-rate loans to lower rates. Finally, consider making a larger down payment to reduce the mortgage amount and associated monthly payment.
What is a good DTI ratio for mortgage approval?
Generally, a DTI of 36% or below is considered ideal by most lenders, with no more than 28% going toward housing costs (front-end DTI). A DTI between 36-43% is still acceptable for QM loans but may result in less favorable terms. DTI above 43% typically requires Non-QM lending. However, government-backed loans have more flexibility: FHA loans may accept up to 57% DTI in some cases, and VA loans use residual income rather than a strict DTI cap. Keep in mind that DTI is just one factor; credit score, employment history, and down payment also matter significantly.