Here’s how to calculate your debt-to-income ratio (DTI) step by step:

Great! Here’s how to calculate your debt-to-income ratio (DTI) step by step:

1. Add Up Your Monthly Debts: Include all your recurring debt payments, such as:
   • Credit card minimum payments
   • Car loans
   • Student loans
   • Personal loans
   • Any other monthly obligations (like alimony or child support)
2. Determine Your Gross Monthly Income: This is the total amount you earn each month before taxes and deductions. Include income sources like:
   • Salary or wages
   • Bonuses or commissions
   • Rental income
   • Other regular income streams
3. Divide Your Monthly Debt by Your Monthly Income: Take the total from step one and divide it by the amount from step two.
4. Convert to a Percentage: Multiply the result by 100 to express your DTI as a percentage.

Example Calculation:
Let’s say your total monthly debt payments are $1,800, and your gross monthly income is $6,000.

• $1,800 ÷ $6,000 = 0.3
• 0.3 × 100 = 30%
  Your DTI is 30%.

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Tips to Lower Your DTI:

• Reduce Debt: Pay down credit card balances, consolidate loans, or focus on high-interest debts first.
• Increase Income: Consider additional income sources, such as a side job or freelance work.
• Limit New Debt: Avoid taking on new financial commitments until after purchasing your home.

Want help with strategies to lower DTI further, or guidance on acceptable DTI for specific lenders?