Debt-to-Income Ratio Calculator
Calculate your DTI ratio to understand your financial health, borrowing capacity, and qualification for student loan refinancing or additional borrowing.
Calculate Your DTI Ratio
Monthly Income
Include salary, bonuses, and other income
Monthly Debt Payments
Personal loans, alimony, etc.
Very manageable debt load with strong borrowing capacity.
Monthly Budget Breakdown
Debt Payment Breakdown
What Your DTI Means
You should qualify for most loans with favorable terms.
Good candidate for refinancing with better rates.
Healthy financial position with room for emergencies.
What is Debt-to-Income Ratio?
Your debt-to-income (DTI) ratio is a percentage that shows how much of your gross monthly income goes toward paying debts. It's calculated by dividing your total monthly debt payments by your gross monthly income.
Formula:
DTI Ratio = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100
Example: If you have $1,500 in monthly debt payments and earn $5,000/month, your DTI is 30% ($1,500 ÷ $5,000 = 0.30 or 30%).
Understanding DTI Ratio Ranges
Excellent: 0-20%
✓Very manageable debt load. You have significant borrowing capacity and will qualify for the best rates. Lenders view you as low-risk.
Good: 21-35%
✓Healthy debt-to-income ratio. You should still qualify for most loans and good interest rates. This is the range most lenders prefer to see.
Caution: 36-42%
⚠Higher than ideal. You may face challenges qualifying for new loans or refinancing. Focus on paying down debt before taking on more.
High: 43-49%
⚠Risky debt level. Most lenders will be hesitant to approve new loans. You're spending nearly half your income on debt - prioritize debt reduction.
Critical: 50%+
✗Very high risk. You're likely struggling to make payments. Immediate action needed - consider debt consolidation, income-driven repayment, or financial counseling.
Why DTI Matters for Student Loans
Loan Qualification
Private student loan lenders and refinancing companies use DTI as a key factor in approval decisions. Most prefer DTI under 40-43%.
Interest Rates
Lower DTI ratios often qualify for better interest rates. A DTI under 20% shows lenders you're a low-risk borrower.
Financial Health
DTI helps you assess whether you're over-leveraged. It's a key indicator of your ability to handle additional debt or financial emergencies.
Future Borrowing
Your DTI affects not just student loans, but also mortgages, car loans, and credit cards. Maintaining a healthy ratio opens more financial opportunities.
How to Improve Your DTI Ratio
Increase Your Income
Ask for a raise, take on a side job, or seek higher-paying employment. Even a small income increase can significantly improve your DTI.
Impact: Increasing income from $50k to $55k drops DTI from 30% to 27% (with $1,250 debt).
Pay Down High-Interest Debt First
Focus on paying off credit cards and other high-interest debt. This reduces your monthly debt payments faster.
Strategy: Pay minimums on everything except your highest-interest debt (debt avalanche method).
Consolidate or Refinance
Consolidating multiple debts or refinancing to lower interest rates can reduce your monthly payments, improving your DTI.
Caution: Extending loan terms lowers payments but may increase total interest paid.
Avoid Taking On New Debt
Delay major purchases and avoid opening new credit accounts until your DTI improves. Every new debt payment increases your ratio.
Example: A $400 car payment increases DTI from 30% to 38% on $50k income.
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