A debt to income calculator is great tool to estimate your eligibility for mortgage programs and their income guidelines. This debt-to-income ratio calculator can do all the work for you, but you may want to learn how to calculate DTI in case a debt ratio calculator isn’t handy in the future.

What is a debt-to-income ratio anyway?

Before leaning how to figure debt to income ratio fractions, also known as ‘DTI ratio‘ percentages, it’s important to know that they’re a tool lenders use to measure your ability to pay them back on time. Lots of consumers believe DTI ratios are mystical or complicated, but not really. How debt to income is calculated is simply the percentage of your total debt in comparison to your total income.

How to calculate debt-to-income ratio percentages.

• Debt-to-income ratios for mortgages are expressed as a percentage of your monthly debt compared to your total monthly income.
• Lenders typically use two separate debt income ratio percentages to weigh an applicant’s financial stability.
• To calculate debt to income ratio for mortgage programs, add up all your monthly bills including rent, new housing payments, child support, alimony, student loans, auto loans, credit cards and any other monthly debts.
• Then, divide the sum total of all your debt by your gross monthly income before tax is paid.
• The result is your debt to income ratio.
• Your “top ratio” (front), factors housing debt only as a percentage of your income.
• Your “bottom ratio” (back), factors in all of your debt, including your new housing payment, car payments, student loans, credit card bills and any other monthly obligations.

How much can I borrow?

In addition to eligibility, today’s mortgage programs use debt-to-income ratios to determine how much mortgage an applicant is eligible for. Therefore, lenders and loan underwriters usually calculate a couple of debt-to-income ratios when judging a borrower’s ability to pay them back. Knowing these debt to income ratio limits are useful when you’re asking yourself ‘how much can I borrow for a home’. You can easily calculate debt to income ratio figures for all of todays’s most popular mortgage programs using this DTI calculator, or you can do it yourself using the following debt to income ratio formula limitations for today’s popular mortgages.

Conventional Loans

• 28% Top Ratio
• 36% Bottom Ratio

FHA Loans

• 31% Top Ratio
• 43% Bottom Ratio

VA Loans

• VA Residual Income Requirements
• 41% Bottom Ratio

USDA Loans

• 29% Top Ratio
• 41% Bottom Ratio