Debt-to-Income Ratio (DTI) compares your monthly debt payments to your gross monthly income. Lenders use it to determine your ability to manage monthly payments and repay debts.
Formula
DTI = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100
What Lenders Want
- 36% or lower — ideal for most lenders
- 43% — maximum for most conventional mortgages
- 50%+ — generally too high to qualify for new loans
Example
Monthly income: $6,000. Monthly debts: $1,800 (rent $1,200 + car $400 + student loan $200). DTI = $1,800 ÷ $6,000 = 30% — good standing.