A debt-to-income (DTI) ratio is calculated by dividing your monthly debt payments by your monthly gross income. Lenders use the DTI ratio to determine how well you manage your debt and if you can afford to repay a loan.
To calculate your debt-to-income ratio, add up your monthly debt payments and divide them by your gross monthly income. Your gross monthly income is the amount of money you have earned before taxes and other deductions are taken out.
Monthly Debt That Should Be Included In Your DTI Ratio:
• Monthly rent/mortgate
• Homeowners insurance
• Homeowers association fees
• Minimum monthly payment on Credit cards
• Auto loans
• Student loans
• Personal loans
Income Used To Determine Your DTI ration:
• Investments (rental properties, stock dividends, etc.)
• Social Security
• Child Support
There may be other forms of income and debt not listed above.
Generally, you want to stay at or below a 36% DTI ratio. A debt-to-income ratio of 43% is usually the highest mortgage lenders will accept when considering you for a mortgage loan. The DTI ratio requirements may vary by different lenders.
Debt-To-Income Ratio Calculator
The Debt-To-Income Ratio Calculator provided by ExcelPal.com gives you a simple excel template that you fill in with your monthly income and debts to calculate your DTI ratio.
-Requires Excel 2007 or Newer
-Macros NOT required