Debt-to-Income Ratio: What Lenders Don't Tell You

What is DTI and Why It Matters

How to Calculate DTI

1. Add up all monthly debt payments
2. Divide by gross monthly income
3. Multiply by 100 to get a percentage

Example Calculation

• Monthly Income: $5,000
• Debt Payments:
  • Mortgage: $1,200
  • Car Loan: $300
  • Student Loans: $200
  • Credit Cards: $100
• Total Monthly Debt: $1,800
• DTI: ($1,800 / $5,000) × 100 = 36%

What's a Good DTI?

• Excellent: Below 20%
• Good: 20-35%
• Fair: 36-43%
• Poor: 44-49%
• Danger Zone: 50%+

How to Improve Your DTI

1. Increase Income

   • Ask for a raise
   • Start a side hustle
   • Work overtime

2. Reduce Debt

   • Pay down credit cards
   • Refinance high-interest loans
   • Avoid new debt

3. Time Major Purchases

   • Delay large purchases before applying for loans
   • Space out credit applications
   • Pay cash when possible

Next Steps

1. Calculate your DTI with our DTI Calculator
2. Create a plan to improve your ratio
3. Monitor your credit score
4. Consult with a financial advisor if needed