Lenders use your DTI to decide whether to approve a loan. It also tells you whether your debt load is manageable.
Add all monthly debt payments (credit cards, car loans, student loans, mortgage/rent, personal loans). Divide by your gross monthly income (before tax). Multiply by 100 for a percentage.
Example: $500 car loan + $300 student loan + $200 credit card minimum = $1,000/month. $1,000 ÷ $5,000 gross income = 20% DTI.
| DTI | Signal |
|---|---|
| Under 20% | Excellent — strong financial position |
| 20-35% | Good — acceptable to most lenders |
| 36-43% | Caution — lenders scrutinize; mortgage approval harder |
| Above 43% | High — most mortgage programs won't approve; focus on paydown |
Mortgage lenders use two ratios: front-end (housing costs only ÷ income) should be under 28%, and back-end (all debts ÷ income) should be under 36-43%. The 28/36 rule is a common benchmark.
The debt payoff calculator shows which debts to tackle first.