๐ณ Debt-to-Income (DTI) Ratio Calculator
DTI (%) = monthly debt payments รท gross monthly income ร 100
Enter your total monthly debt payments (mortgage, credit cards, auto loans, etc.) and your gross (pre-tax) monthly income to calculate your debt-to-income ratio (DTI) โ a widely-used measure of how much of your income goes toward debt repayment.
How to use
- Enter your total monthly debt payments.
- Enter your gross (pre-tax) monthly income.
- Your debt-to-income ratio (DTI) is calculated automatically.
How the calculation works
The debt-to-income ratio (DTI) is the share of your gross income (before tax) that goes to debt repayments. DTI (%) = total monthly debt payments รท gross monthly income ร 100 It is a key criterion in mortgage approval. For example, Japan Housing Finance Agency's Flat 35 loans require a ratio of 30% or less for annual incomes under ยฅ4 million and 35% or less above that, including payments on the new mortgage. For comfortable repayment, keeping payments to around 20โ25% of take-home pay is often suggested. Include mortgage, car loans, education loans, card loans, revolving credit and instalment payments on phones.
Worked example
Monthly debt payments ยฅ80,000, gross monthly income ยฅ300,000 DTI: 80,000 รท 300,000 ร 100 โ 26.7% On an annual basis ยฅ960,000 in repayments รท ยฅ3,600,000 income = 26.7% Against the Flat 35 limit (30% for incomes under ยฅ4 million), there is room for about ยฅ10,000 more a month in repayments.
Things to be aware of
- Lenders often calculate the ratio using a higher "screening rate" than the actual loan rate, so their figure can be higher than this tool's.
- Criteria differ between lenders. Check with the lender you plan to borrow from.
- Missing instalment payments on a phone is recorded with credit bureaus in Japan and can affect loan applications.
FAQ
What is DTI?
It's the percentage of your gross monthly income that goes toward monthly debt payments. It's widely used, for example in mortgage underwriting, to assess borrowing capacity.
What's the formula?
DTI (%) = total monthly debt payments รท gross monthly income ร 100 โ a simple division.
What should I include in "total monthly debt payments"?
Typically this includes fixed monthly payments like mortgage, credit cards, auto loans, and student loans. Exactly what to include can vary by lender and loan type, so check with your specific lender for their exact criteria.