How the debt-to-income ratio is calculated
DTI is monthly debt payments divided by gross monthly income, before taxes and deductions. Lenders look at two versions: the front-end ratio counts only the housing payment (rent, or mortgage principal, interest, taxes and insurance), and the back-end ratio counts every recurring debt payment, including car loans, student loans, credit card minimums and support obligations. Living costs such as utilities, groceries and insurance are not debts and are left out.
Worked example (pre-filled). With $6,000.00 of gross monthly income, a $1,650 housing payment is a front-end ratio of 27.5%. Adding a $420 car payment, $250 of student loans and $120 of card minimums brings total debt payments to $2,440.00, a back-end ratio of 40.7%, leaving $3,560.00 of gross income before taxes and everything else.
Every lender and loan program sets its own DTI limits, and they vary by loan type, credit profile and reserves, so this page does not state a threshold. The ratio uses gross pay because that is what underwriting uses; your take-home is smaller, and the Georgia paycheck calculator shows by how much. For a prospective mortgage, the mortgage calculator produces the PITI figure to enter as the housing payment. This page computes; it does not recommend a loan, lender, investment or tax position.
Formula and assumptions
back-end DTI = (housing + all other monthly debt payments) ÷ gross monthly income × 100
- Gross income is before tax; convert an annual salary by dividing by 12, or hourly pay by × hours × 52 ÷ 12.
- Only recurring debt payments count; utilities, insurance premiums and groceries are not included.
Frequently asked questions
How do I calculate my debt-to-income ratio?
Add up monthly debt payments and divide by gross monthly income. $2,440 of payments on $6,000 of income is 40.7%.
What counts as debt in DTI?
Rent or mortgage, car loans, student loans, credit card minimum payments, personal loans and court-ordered support. Utilities, phone bills and insurance do not count.
Is DTI based on gross or net income?
Gross income, before taxes and deductions. That is the figure lenders use.
What is the difference between front-end and back-end DTI?
Front-end includes only the housing payment; back-end includes housing plus all other monthly debt payments.
Related calculators
- All loans & money calculators
- Mortgage calculator: Principal and interest plus property tax, insurance and HOA, with yearly balances
- Credit card payoff calculator: Months to pay off a balance at a fixed payment, or the payment for a target date
- Loan payment calculator: Monthly payment, total interest and a full amortization schedule
- Georgia paycheck calculator: take-home pay after federal, FICA and Georgia tax
- Salary to hourly conversion
Sources
This calculator gives general estimates from the figures you enter. It is not tax, legal, payroll or financial advice. See our disclaimer.