Glossary term
Debt-to-Income Ratio (DTI)
Debt-to-income ratio is the share of your gross monthly income that goes to required debt payments, such as loan installments, minimum card payments and housing. Lenders use DTI to judge whether you can take on another payment. A lower ratio signals more room in your budget and generally makes approval easier.
Updated October 17, 2026 · Editorial Team
How Debt-to-Income Ratio (DTI) works in practice
To find DTI, add up your monthly debt obligations and divide by your monthly income before taxes. Lenders count the payments that appear on your credit report and housing costs; everyday expenses such as groceries and utilities are not included. Each lender sets its own limits.
Suppose you earn $6,000 a month before taxes and pay $1,100 for rent, $450 on a car loan and $250 in card minimums. Your debt payments total $1,800, so DTI is $1,800 ÷ $6,000 = 30%. Adding a $400 loan payment would push it to $2,200 ÷ $6,000 = 36.7%.
Knowing your DTI before you apply helps you estimate how much payment you can add without straining your budget. Paying down debt or increasing income lowers it. Because DTI uses gross income, your real take-home cushion is smaller than the ratio suggests.
Debt-to-Income Ratio (DTI): quick questions
Does DTI use gross or net income?
Lenders normally use gross income, before taxes and deductions.
Is rent included in debt-to-income ratio?
Housing costs are usually included, whether rent or a mortgage payment. Lender rules vary for other items.
Does DTI affect my credit score?
No. Income is not in your credit report, so DTI is not part of your score, though lenders review it separately.
Sources
- Credit reports and scores — Consumer Financial Protection Bureau. Accessed October 17, 2026.
- Auto loans — Consumer Financial Protection Bureau. Accessed October 17, 2026.
We cite primary sources: regulators, central-bank data and federal agencies. Worked examples on this page are our own calculations. See our methodology.
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