Debt-to-Income (DTI) Calculator

Debt-to-income ratio, or “DTI,” is a financial measurement used by lenders when evaluating a loan application.

DTI is a comparison of a borrower’s monthly debt payments with monthly income. The calculation is simple: total monthly debt divided by total monthly income equals DTI. The lower the DTI, the better.

The DTI calculator below will calculate both common types of DTI: front-end and back-end. See the FAQ below to learn more about these DTI calculations and more.

Front-End DTI
Back-End DTI

Debt-to-Income Calculator FAQs

1. Why is DTI important?

DTI is used to assess a borrower’s potential to repay a loan. Lenders are basically looking to determine how much of a borrower’s income would be used to pay down debt on a monthly basis. The larger the portion of a borrower’s income goes towards debt, the potentially more difficult it may be for a borrower to repay a new loan.

I’m not sure if I should apply to refinance my student loans since my DTI is XX%. What should I do?

Most lenders we’ve partnered with offer a soft credit pull rate check, which will check your DTI as well. A soft credit pull offers the advantage of checking rates and eligibility without impact on the applicant’s credit. You can see which lenders offer a soft credit check on this page.

Will the lender include the monthly payments from the new loan in the DTI calculation?

Typically, yes. DTI calculations are usually made including monthly payments from the loan for which the borrower is applying. In other words, when applying for a mortgage, the lender will typically add in the new monthly mortgage payment and other associated costs to the applicant’s debt payments before performing the DTI calculation. A borrower’s monthly payments must typically satisfy a lender’s DTI requirements under these conditions in order to be approved.

What types of loans/lenders use DTI to determine eligibility?

Many different lenders will calculate the applicant’s DTI to determine their eligibility for a loan. This includes not only student loan refinancing but other loans including home mortgages, auto loans, and more.

What’s the difference between front-end and back-end DTI?

Front-end DTI is strictly related to monthly housing payments. These payments include payments such as a mortgage or rent, mortgage insurance premiums, property taxes, and more. A front-end DTI of 28 percent or lower is often recommended. However, limits may be higher for certain types of loans.

Back-end DTI is a calculation of all monthly debt payments, including housing. A back-end ratio of 36 percent is often recommended. Once again, certain loan types may allow for higher limits.

Some common limits for mortgages include:

  • FHA: 31% front-end, 43% back-end
  • USDA: 29%, 41%
  • VA: 41%

What DTI do I need to get a loan?

That depends on the lender. There’s no set guideline for DTI for all types of loans. However, for home mortgages it’s typically limited to 43% for the back-end DTI. Student loan refinancing and other lenders may have similar requirements, but they typically do not report DTI limits.

How do I improve my DTI?

There are essentially only two ways to improve your DTI: increase your income or decrease your monthly debt payments. See these tips for improving your DTI. Consider using strategies to pay off your loans faster. You can also try picking up a side hustle or requesting a raise to increase your income.

I’m on an income-driven student loan repayment plan (IDR). How is my DTI calculated?

This gets a bit tricky. Often when calculating a borrower’s DTI when s/he is enrolled in an IDR plan for student loans, lenders use a percentage of the principal balance rather than the actual monthly payment amount. For example, for an FHA mortgage, DTI may be calculated using 1% of the applicant’s federal student loan balance being repaid with IDR. However, there are exceptions to this, so it’s best to consult the lender about these requirements.

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