Debt To Income Ratio Calculation


The debt-to-income ratio (DTI) is the percentage of a borrower's monthly gross income that goes toward paying debts. The DTI ratio includes one's housing expenses (mortgage principal and interest payment, property taxes and insurance) plus all other recurring monthly payments divided by their gross monthly income.

Here is an exapmle:

Gross Monthly Income $8,000    
Mortgage Principal & Interest $1,200    
Property Taxes $250    
Homeowner's Insurance $75    
Total Housing Expense   $1,525  
Top Ratio ($1,525 / $8,000)     19.06%
Auto Loan $300    
Student Loans $150    
Credit Cards 250    
Other $100    
Total Other Expenses   $800  
Total of all Expenses (housing + other)   $2,325     
Bottom Ratio ($2,325 / $8,000)     29.06%