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How To Calculate Your Debt To Income Ratio

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Introduction: Calculating Your Debt To Income Ratio

Your debt-to-income (DTI) ratio is the percentage of your income that goes toward paying your debt. It's important not to confuse debt-income ratio with credit utilization which is the amount of debt you have related to your credit limits.

A lot of lenders, especially mortgage and auto lenders, use your debt-to-income ratio to figure out how much a loan you can handle. For example, a mortgage lender will use your debt-to-income ratio to figure out how much mortgage you can afford after all your other monthly debts are paid.

You, too, can calculate your debt-to-income ratio to figure out how much debt you have. Print and use the Debt to Income Ratio Worksheet to help calculate your ratio.

While, it's good to know how you can calculate your debt-to-income ratio by hand, you can also use a debt-to-income ratio calculator to get a faster result.

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