DTI Calculator - Debt-to-Income Ratio
Calculate your debt-to-income ratio and check loan eligibility criteria
Complete Guide to Debt-to-Income Ratio Calculator
What is Debt-to-Income Ratio (DTI)?
Debt-to-Income Ratio (DTI) is a financial metric that compares your total monthly debt payments to your gross monthly income. Our DTI calculator helps you determine this crucial ratio that lenders use to assess your ability to repay loans and manage monthly payments responsibly.
How to Calculate DTI Ratio
DTI Formula:
DTI = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100
Example Calculation:
- Monthly Income: ₹1,00,000
- Home Loan EMI: ₹30,000
- Car Loan EMI: ₹15,000
- Credit Card Payments: ₹5,000
- DTI = (₹50,000 ÷ ₹1,00,000) × 100 = 50%
DTI Ratio Categories
| DTI Range |
Category |
Loan Approval |
Financial Health |
| ≤ 20% |
Excellent |
Easy approval, best rates |
Very healthy financial position |
| 21% - 35% |
Good |
Good approval chances |
Manageable debt levels |
| 36% - 40% |
Fair |
Moderate approval, higher rates |
Approaching debt stress |
| 41% - 50% |
Poor |
Difficult approval |
High debt burden |
| > 50% |
Critical |
Very unlikely approval |
Financial stress zone |
DTI Requirements by Loan Type
| Loan Type |
Maximum DTI |
Preferred DTI |
Comments |
| Home Loan |
50% |
≤ 40% |
Varies by lender and profile |
| Personal Loan |
40% |
≤ 30% |
Stricter due to unsecured nature |
| Car Loan |
45% |
≤ 35% |
Asset-backed financing |
| Credit Card |
35% |
≤ 25% |
Revolving credit consideration |
| Business Loan |
45% |
≤ 35% |
Cash flow analysis important |
Components of DTI Calculation
Monthly Income (Include):
- Salary and wages (gross)
- Rental income
- Investment income
- Business income
- Spouse/co-applicant income
- Pension and retirement income
Monthly Debts (Include):
- Home loan EMI
- Car loan EMI
- Personal loan EMI
- Credit card minimum payments
- Education loan EMI
- Other loan obligations
Strategies to Improve DTI Ratio
Increase Income:
- Ask for salary raise or promotion
- Take on freelance or part-time work
- Start a side business
- Invest in rental properties
- Include spouse income (if applicable)
- Monetize skills and hobbies
Reduce Debt:
- Pay off high-interest debts first
- Consolidate multiple loans
- Make extra payments on principal
- Avoid taking new debt
- Negotiate lower interest rates
- Consider debt settlement (if needed)
DTI vs Other Financial Ratios
| Ratio |
Formula |
Purpose |
Ideal Range |
| DTI Ratio |
Total Debts ÷ Income |
Loan approval, repayment capacity |
≤ 40% |
| Savings Rate |
Savings ÷ Income |
Financial planning, emergency fund |
≥ 20% |
| Emergency Ratio |
Emergency Fund ÷ Expenses |
Financial security |
3-6 months |
| Net Worth |
Assets - Liabilities |
Overall financial health |
Positive & growing |
DTI Impact on Loan Terms
How DTI Affects Your Loan:
- Interest Rates: Lower DTI often qualifies for better rates
- Loan Amount: Higher DTI reduces maximum loan eligibility
- Approval Speed: Lower DTI leads to faster approval process
- Documentation: Higher DTI may require additional verification
- Co-signer: High DTI might necessitate a guarantor
- Down Payment: Higher DTI may require larger down payment
Industry-Specific DTI Considerations
Salaried Employees:
- Stable income makes DTI calculation straightforward
- Include variable pay (bonuses) conservatively
- Consider job security and industry stability
- Factor in future salary increments
Self-Employed/Business Owners:
- Use average income over 2-3 years
- Lenders may require lower DTI ratios
- Business cash flow analysis important
- Separate personal and business finances
Common DTI Calculation Mistakes
- Using net income instead of gross: Always use gross monthly income
- Forgetting credit card minimums: Include minimum payment requirements
- Excluding joint liabilities: Include co-signed loans and guarantees
- Not updating for new loans: Factor in the new loan payment
- Ignoring variable income: Be conservative with irregular income
- Missing alimony/support payments: Include all mandatory payments
Using Our DTI Calculator
- Enter your gross monthly salary and other income sources
- Add spouse income if applying jointly
- Input all monthly debt obligations (EMIs, minimums)
- Include credit card minimum payments
- Review the calculated DTI ratio and recommendations
- Use the improvement suggestions to optimize your profile
- Check eligibility for different loan types
Frequently Asked Questions
Should I include rent in DTI calculation?
No, rent is not included in DTI calculation for loan approval purposes. DTI only includes debt payments like EMIs and credit card minimums.
What if my DTI is above 40%?
You can still get loans, but with higher interest rates or stricter terms. Focus on paying down existing debt or increasing income before applying.
How often should I check my DTI?
Review your DTI monthly when paying bills, and before applying for any new credit or loans to ensure you stay within healthy limits.
Can DTI affect my credit score?
DTI doesn't directly affect credit score, but high DTI often correlates with high credit utilization, which does impact your score.
Disclaimer: DTI calculations are estimates for guidance purposes. Actual loan eligibility depends on various factors including credit score, income stability, and lender policies. Consult with financial advisors for personalized advice.