Calculate your Debt-to-Income ratio.
DTI = total monthly debt payments / gross monthly income × 100%.
$1,500 in monthly debt payments on $5,000 gross income is a 30% DTI.
Most mortgage lenders prefer a total DTI under 43% and a housing-only ratio under 28–31%.
Include the new housing payment, credit cards, auto and student loans, and any other recurring debt. Utilities and groceries are not included.
Pay down debts, increase income, or avoid taking on new debt before applying for a loan.
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