Debt-to-income: drag the debts
Drag the handle along the bar to raise monthly debts against gross pay. The headline is the back-end debt-to-income ratio. Marks sit at 36 and 43 percent, the two ceilings this picture uses. Room left is what a new payment would have to fit inside.
Back-end DTI
32.0%
Room under 43 percent
$825
$2,400 of monthly debts against $7,500 of gross pay, which reads as under the 36 percent mark. Illustrative arithmetic, not an approval or advice.
In short
- Drag the handle to the right to add monthly debts, to the left to take them off.
- Watch the reading cross the 36 and 43 percent marks. Room left is the gap to the ceiling you picked.
- Raise gross monthly income to see the same debts become a smaller ratio.
- Focus the handle and use the arrow keys to step the debts.
Payments over gross pay
Debt-to-income is required monthly payments divided by gross monthly income. Gross means before tax and deductions. Dividing by take-home pay makes the same debts look worse, which is the mistake that talks people out of an application a lender would have taken.
The ratio counts payments, not balances. A card with a small minimum barely moves it. Finishing a car loan takes the whole payment off. How debt-to-income works is the identity, with the debt-to-income calculator under the answer.
Two names, two ceilings
Front-end DTI counts housing only. Back-end DTI counts housing plus every other required payment, and it is the one a lender means when the word is used alone. Front-end against back-end DTI is that pair.
The 36 percent mark is a conservative rule of thumb. The 43 percent mark is the figure most often quoted as the edge of a mainstream US mortgage. Other countries set the limit somewhere else, so the ratio travels and the ceiling does not. How mortgage affordability works is the loan-size ceiling that sits on top of this ratio.
A score is a different object
A credit score predicts the chance of a missed payment. DTI measures whether the payments already contracted leave room for one more. Mixing the two is how a strong score gets treated as spare capacity it does not grant. This picture is the ratio, the band it falls in, and the room under a ceiling.
Common questions
Is 43 percent a hard cap?
No. It is the figure most often quoted as the edge of a mainstream US mortgage. Automated underwriting sometimes allows more when the rest of the file is strong, and other countries use a different test. Treat the mark as a ceiling to size a new payment against, not as an approval.
Does rent count?
On a mortgage application, current rent drops out and the proposed housing payment replaces it. On any other reading of DTI, rent is the housing line. The explorer treats whatever you drag as total required monthly debt.
Is this an approval?
No. It is the one division a lender quotes, on figures you set, with two common US ceilings marked. It is educational material, not advice.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.