Debt To Income Calculator | Credit Risk Calculator

Calculate your debts in comparison to income to calculate your househould income in terms of debt-to-income ratio to provide your credit rick rating.

Debt To Income Calculator
Monthly Income
Your Gross Monthly Income
Your Partner's Gross Monthly Income
Alimony / Child Support
Any Other Regular Income
Monthly Debt Payments
Rent / Mortgage
Property Taxes
HOA Dues / Fees
Homeowners' Insurance
Car Loan
Personal Loan
Student Loan
Min. Credit Card Pmt.
Alimony / Child Support
Other Debt
Debt To Income Calculator Results
Your Debt-to-Income (DTI) Ratio is:
Back-End Debt-to-Income Ratio:
Front-End Debt-to-Income Ratio:
Total Monthly Income:
Total Monthly Debt:
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Use the Debt-to-Income Calculator to Know Your Financial Capacity

What is a debt-to-income ratio? Debt-to-Income or DTI ratio is a standard measure of your financial condition that the lenders need to look at before approving your loan. The DTI ratio is not just for new loans, it is also a crucial tool for you to monitor your financial condition. Your debt-to-income ratio represents a comparison of your monthly debt payments to monthly gross income. Calculating this enables you to know the percentage of your income that goes towards the monthly repayments of debts. Your financial flexibility totally depends on this. Now the question is:

How to calculate my Debt-to-Income ratio?

The following are the steps to calculate the debt-to-income ratio:

  • Add the recurring monthly debt, including the mortgage payments or rent, credit cards, personal loans, student loans or child support, if any of these things apply to you.
  • Add up the monthly income including the gross wages before the tax and national insurance deductions. You should also add any freelance income or investment profits that you might receive.
  • The last step would be to divide the monthly debt by the monthly income and then multiply the answer by 100.

Sounds a little tedious, right? It seems tiring when you are forced to do it manually, especially for first timers, who are still trying to understand how to calculate DTI. But, thankfully technology solved this problem for everyone a long time ago. Rarely do we come across people performing manual calculations for DTI as there are online tools available for them. The Debt-to-Income calculator by iCalculator is good calculator for DTI that gives instant calculation of your debt-to-income ratio.

A DTI calculator is the perfect tool for you whether you are preparing for a loan or reviewing your finances. Simply enter information into the calculator including taxes, car loan, monthly gross income, etc. and the calculator shows you your debt-to-income ratio in a jiffy. It's easy, quick and error free. That simple!

The DTI ratio is often used in credit score calculations to understand whether you will be able to cope any sudden financial changes. Also, the tool is the ideal way to gauge whether you will be accepted for a loan based on your financial capability to manage additional monthly repayments.

Why does the debt-to-income ratio matter?

A low debt-to-income ratio is an ideal condition as it highlights a positive balance between the income and the debt. It also suggests that you will be able to pay off the loan without much trouble. A high debt-to-income ratio suggests that you already have too much debt to repay and there is a constant struggle to pay existing expenses.

Banks and other financial institutions that are responsibility for providing credit, have their own definition of what is an acceptable debt-to-income ratio. As already discussed, the lower debt-to-income ratio is the certain precursor of whether you are likely to receive the amount of credit you are applying for.

What does a good debt-to-income ratio mean?

Lenders have different ways of finding out who should or who should not receive a loan. You should be aware of two kinds of ratios for applying for a loan.

Front-end-debt-to-income ratio

Some lenders prioritise certain debt payments over others. A front-end debt-to-income ratio covers mortgage payments, housing expenses, homeowner's insurance and property taxes.

Back-end debt-to-income ratio

Back-end debt-to-income ratio provides a better picture of debt burden. Some lenders are more interested in the back-end debt-to-income ratio as this includes everything from student loan to child maintenance as well as credit card payments.

How can a calculator help you lower the debt-to-income ratio?

A calculator is a great tool to understand the debt-to-income ratio so that adequate steps could be taken in order to bring it down. You might want to reduce your debts so that you can be accepted for a mortgage. The effort could also be to reduce the debt burden you face each month, reducing the cost of monthly repayments is always a big help for personal finances. You will have to employ ways to reduce your debt burden so that the debt-to-income ratio can be improved. This definitely involves strategic long-term financial planning, but it is not impossible. Let us look at some of the ways to handle it:

  • Pay off debt: If the debt can be paid off before the new loan is applied for, the debt-to-income ratio will reduce.
  • Increase your income: Try to increase your income sources. Though this is not always possible, a larger income every month will lower the debt-to-income ratio as well as allowing you to repay existing debts and improve your overall credit score. Sometimes, it is worth considering an extra job or additional hours. Whilst this can be difficult to manage, it will be worthwhile in the long run as your debts decrease, your DTI and credit score improves and your ability to access good mortgage deals etc. increases.
  • Delay borrowing: If you are planning for an important home loan or new mortgage, you should delay if you can if there is already a loan being repaid as it will affect your DTI and chances of securing low interest rates on borrowing.