Your debt-to-income ratio is one of the key financial metrics that lenders analyze when determining what credit products you qualify for, such as credit cards, personal loans, and mortgages. Check out our debt-to-income calculator below to see how you stand.
But first, let's explore the differences between a low and high debt-to-income ratio.
- Low DTI: A low DTI is a powerful indicator of financial health. It signifies that you have a significant portion of your income available to pay off your debts, a situation that lenders highly appreciate. This not only opens doors to better interest rates but also translates into paying less over the life of your loan, a significant financial advantage.
- High DTI: Conversely, a high DTI can be a red flag for lenders. It suggests that you might struggle to meet your minimum debt payments, which increases your risk profile. Consequently, lenders will likely offer higher interest rates, potentially leading to a more challenging financial situation.
Calculate Your Debt-to-Income
Calculator
Debt-to-Income Calculator
Monthly Debt Payments
Monthly Gross Income
Your Debt-to-Income Ratio
on Upstart Website
Upstart Personal Loans
Smart Money Rating: 5/5
Best For: Fast Online Loans
Loans From: $1,000 – $50,000 (Terms Apply)
Offer: Checking Interest Rate Will Not Affect Credit Score
on BadCreditLoan’s Website
BadCreditLoans
Smart Money Rating: 4.5/5
Best For: Loans for Bad Credit
Amount: Loans between $500 – $10,000 (Terms Apply)
Monthly Expenses Are Excluded
Only your monthly minimum debt payments are included in your DTI calculation. Your regular monthly costs – fixed costs or variable costs – are not included in your DTI calculation.
Monthly Fixed Costs
- Rent Payment
- Cell Phone Bill
- Car Insurance
Monthly Variable Costs
- Groceries
- Transportation Costs (e.g. Gas/Electricity)
- Utilities
Read More: 6 Ways to Improve Your Debt-to-Income Ratio
How to Lower Your DTI
Lowering your debt-to-income ratio can improve your finances in many ways. A low DTI gives you better access to lower interest rates on personal loans, mortgages, credit cards, and other credit products. Here are some tips on how to lower your DTI quickly:
- Implement a spending fast (Start a 30-day Spending Challenge)
- Earn more money with a side hustle (Try these 29 Side Hustle Ideas)
- Decrease your spending (Learn now to Curb Your Spending)
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