Your debt-to-income ratio is the single number lenders lean on most when deciding how much you can borrow: total monthly debt payments ÷ gross monthly income, as a percentage. It answers "how much of your pay is already promised to debt before this new loan?" The lower it is, the more comfortably you can take on a mortgage or car loan. The widely used limits are 36% (the conservative target) and 43% (the usual Qualified-Mortgage ceiling).
Reviewed: June 20, 2026 · Author: Naveen P N, Founder — AI Calculator · Verified against: standard back-end DTI definition and the 28/36 rule. Not financial advice.
The DTI formula
Use gross income (before tax) and the required monthly payment for each debt — for credit cards that's the minimum, not the full balance. Count mortgage/rent, auto, student and personal loans, and card minimums; leave out utilities, groceries, insurance and taxes. Rearranging the formula gives a spending target: at any income, your maximum total debt at 36% is simply 0.36 × income.
Worked example — $1,800 debt on $6,000 income
Scenario: gross monthly income $6,000, total monthly debt payments $1,800.
At 30% this borrower sits comfortably in the healthy band with about $360 of monthly room before hitting the 36% target, or $780 before the 43% ceiling. Watch the bands move with debt at this income: $2,400 of payments is 40% (manageable but tightening), and $3,000 is 50% (very high — most lenders would decline new credit). Because income is the denominator, a raise lowers DTI just as effectively as paying down a loan.
Frequently Asked Questions
Total monthly debt ÷ gross monthly income. $1,800 ÷ $6,000 = 30%. Lenders use it to size new loans.
≤36% healthy, 37–43% manageable, 44–49% high, ≥50% very high. 43% is the usual mortgage ceiling.
Mortgage/rent, car, student, personal loans, card minimums. Not utilities, groceries, or taxes.
Housing under 28% of gross income, total debt under 36%. On $6,000: ≤$1,680 housing, ≤$2,160 total.
Cut monthly debt or raise gross income. Pay off a small loan, or avoid new debt before applying.