Debt to Income Ratio Calculator

Purpose and model boundary

Use this to work out both debt-to-income ratios a lender measures you by: housing as a share of gross monthly income, and all debt as a share of it. It then puts those ratios against every published guideline at once, names the strictest one your total still clears, and reports how much more you could pay each month before each guideline runs out.

It reports where the arithmetic puts you. It never says whether a lender will agree: a lending decision also turns on credit history, reserves, employment and the property itself, none of which is entered here.

Inputs and units

Governing relationships

The housing ratio, which lenders call the front-end ratio, is the housing payment divided by gross monthly income.

The total debt ratio, the back-end ratio, is every monthly debt payment including housing divided by the same income. Where a payment on borrowing you are considering has been entered, the same ratio is reported again with that payment added.

The room left under a guideline is worked the other way round: take the guideline as a share of income, subtract the debt payments already counted, and what is left is the largest further monthly payment that would still keep the ratio at or under it. Where that comes out below nothing, there is no room and the figure is reported as nothing rather than as a negative.

The guidelines themselves are carried as editable illustrative values rather than as rules: the conventional guideline, the benchmark lenders quote most often, and the ceiling an automated underwriting decision applies.

Calculation sequence

This is the order in which the reported figures depend on one another, each step traceable to what the calculator says a figure is built from. It is not a claim about the order in which the workbook evaluates its own cells.

1. Add the five payment lines together to get what you pay each month on borrowing, housing included.
2. Divide the housing payment by gross monthly income to get the housing ratio.
3. Divide the whole of the monthly debt payments by the same income to get the total debt ratio.
4. Add the payment you are considering, where one was entered, and report the total debt ratio again with it included.
5. For each guideline, work out the largest further monthly payment that would still leave the total debt ratio at or under it.
6. Subtract the payment you are considering from each of those to get the room still left under each guideline.
7. Name the strictest guideline the total debt ratio still clears, which by construction means every looser one is cleared as well.

Outputs and interpretation

Model Status reads OK, or explains why the inputs are not valid or why the answer deserves a second look. It is shown alongside the results rather than in place of them.

Every figure above is returned by the model. The page arranges and formats them; it computes none of them.

Validation and status logic

These are the states the delivery's own recorded runs exercise, so the table records what this calculator has been observed to return rather than every branch it could take. A figure that moves with the inputs is shown as ….

Assumptions and limitations

• Every figure is a monthly payment, never a balance. A large debt paid slowly weighs less here than a small one paid quickly, which is how the ratio is defined rather than a simplification.
• Income is gross, before tax and before any deduction, because that is the basis a lender uses.
• The guidelines carried here are illustrative published figures, not rules any particular lender is bound by. A lender may apply a different one, may allow an exception for compensating factors, or may not use these ratios at all for the product you want.
• Only the guidelines for total debt are compared on the chart. The tighter housing guidelines are reported in words above rather than drawn.
• Credit history, savings, employment history, the property and the loan product are all outside the model, and any of them can matter more than the ratio does.

Restrictions and non-computing states

This calculator enforces the numeric limits recorded above before the ratios are worked out, so a value outside them is refused rather than answered.

Gross monthly income must be above nothing, because every ratio here is a monthly payment divided by it, and a division by nothing has no answer to report.

Five of the seven fields are optional and may be left blank. A blank is read as no such payment rather than as a payment of nothing, and for these fields the two come to the same total.

Where a ratio is already at or past a guideline, the room left under it is reported as nothing rather than as a negative amount, because you cannot take on less than no borrowing.

Errors and warnings

NOT VALID means the inputs do not describe a question this calculator can answer, and the figures beside it should not be relied on. CHECK is not an error: the arithmetic is sound and the figures stand, but the ratio has passed a guideline that most lenders apply, and the room figures beside it say what would have to come off. The status is shown with the results rather than in place of them, so a flagged answer is still a readable one.

A value the page itself refuses, because it falls outside the limits above, is rejected before the calculation is requested and no figures are returned at all. That is different again from a transport or service failure, where the page reports that the result could not be fetched rather than showing a stale or partial one.

The definition of the total debt ratio used here, monthly debt payments divided by gross monthly income, is the Consumer Financial Protection Bureau's; see what is a debt-to-income ratio, which also works the definition through an example.

Two of the guidelines carried on this page, 36 percent for a manually underwritten loan and 50 percent through automated underwriting, are stated in the Fannie Mae Selling Guide at B3-6-02, debt-to-income ratios. That guide also describes conditional allowances above 36 percent that depend on facts this calculator does not hold, which is why no such figure is drawn as a guideline here.

On which payments count and which do not, including that rent counts as well as a mortgage payment and that alimony and child support are counted as debt rather than deducted from income, see Wells Fargo on understanding your debt-to-income ratio.

These sources provide background; they do not supply the calculator's assumptions or certify its result. This calculator is informational and is not financial, investment, or tax advice. A ratio is one of several things a lender weighs, and clearing a guideline here is not an offer, an approval or a prediction of one.