Understanding Your Debt to Income Ratio

Understanding Your Debt to Income Ratio

Although your debt to income (DTI) ratio doesn't directly affect your credit score, it is a key component of your credit health and can play a role in your credit application when you are applying for a major loan or mortgage.

What is my debt to income ratio?

Your DTI ratio helps lenders evaluate how much additional debt you can handle and how much of a credit risk you pose. It is generally calculated by dividing your monthly income by your total monthly debt payments, including minimum credit card payments, auto loan and student loan payments and any other regular debt obligations. Your income isn't reported in your credit report, so as part of a loan application, lenders will often request either a self-reported estimate or documentation confirming income.

Although your DTI ratio isn't one of the key factors that calculate your credit score, it can have a significant impact on your ability to get credit.

How does my DTI ratio impact my credit?

For certain loans like mortgage loans, lenders scrutinize your DTI ratio when you are applying for credit because it helps them evaluate your ability to repay your debts. Lenders tend to set your interest rates according to the risk you pose.

If your DTI ratio is low, then you are more likely to have the income necessary to repay your debts. If your DTI ratio is high, then you may be overwhelmed by debt and unable to pay back new debt obligations. The standard rule of thumb is that your DTI ratio should be less than 36 percent. Keep in mind that a DTI ratio as high as 36 percent could put you at risk of paying higher interest rates or being denied altogether. The Consumer Financial Protection Bureau also highlights 43 percent as an important number because it is generally the highest debt-to-income ratio a consumer can have while still being eligible for a Qualified Mortgage.

If you want a quick picture of what your debt to income situation should generally look like, try this simple calculation. Approximate your monthly gross income and multiply that number by 36 percent. For example, if you have a $2,200 monthly gross income:


$2200 (Gross monthly income) X .36 (Generally recommended maximum DTI)

= $792 (Amount your total monthly debt payments should generally not exceed)


This calculation gives you a quick guideline of what a comfortable debt load looks like for your monthly income.

What if my DTI ratio is too high?

If your DTI Ratio is higher than you'd like, the two ways to lower it are to increase your income or lower your debt payments. With extra time, you may be able to take on a second job. Already doing well at work? Try making a case for a raise. To lower your total monthly debt payments, consider fully paying off loans or credit cards, refinancing your loans to lower your individual monthly payments or consolidating your debt.

Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

All Comments

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1 Contribution
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Helpful to 151 out of 175 people

Where does credit karma obtain my income amount to compute the DTI? I couldn't fine anywhere on their site where I can supply that info.

Reply by
Reneedeniseblaze

2 Contributions
69 People Helped
Helpful to 63 out of 78 people

If you go to your Credit Report Card, you will get "grades" for things like; utilization, on-time payments, age of accounts, ect. At the bottom of that list is Debt To Income Ratio and a place to input your Reported Monthly Household Income

Reply by
gonzomic

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36 People Helped
Helpful to 36 out of 46 people

on the My Credit tab, go to Credit Report Card, scroll down to DTI. enter gross monthly and save

Reply by
wsilas

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0 People Helped

When you signed up for credit karma, it asked you for your income, so they're numbers were computed based off of what you entered into their site when you first signed up......

Reply by
cnraghu

1 Contribution
0 People Helped

Gross income is provided by the user under My Credit -> Credit Report Card -> Debt to Income Ratio - "Reported Monthly Household Income: "

Reply by
CForlai

2 Contributions
0 People Helped

In your credit report card at the bottom there is a debt to income ratio, You can enter your estimated monthly income there.

Reply by
ILOPES

4 Contributions
3 People Helped

I think they ask that question when you join the page the first time. 

Reply by
bmcewen1513

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0 People Helped

I belive you originally set up your monthly income when setting up your Credit Karma Profile. If I am mistaken, you can enter this manually by clicking on the My Credit tab ( Should be the very first tab) select the sub catagory of Credit Report card, scroll to the very bottom of this page where you will find Debt to income ratio section with an input box where you manually input your estimated monthly household income. Hope this helps.

Reply by
cnmotley

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0 People Helped

There is a space at the bottom of the credit report card to enter it

Reply by
brooklyngirl55

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0 People Helped

i don't own the credit card that brought down my overall credit for september by 21 pts how do i fix this.  i called the credit card company the find out if someone was using my information to obtain this credit card they assured me i don't have one they checked by using my ss# and name i email this site to take this credit card off my profile because i don't own it and it has brought down my score by 21 pts. but have heard nothing back any suggestions? from anyone? please???? brooklyngirl55 thanks

Reply by
eebarron

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1 Person Helped
Helpful to 1 out of 3 people

very helpful! know i understand

Reply by
davidweeks256

2 Contributions
7 People Helped

In the credit report card area, the last question asks you to estimate your monthly income.  That is where they obtain it to computer the DTI.

Reply by
mumford64

1 Contribution
0 People Helped

i don,t think creditkarma know what they are talking about i don,t have a payment of 664.00.that is not true.and also that monthly is wronge also,get it together creditkarma,get it together.

Reply by
kickin49er

1 Contribution
0 People Helped

Where does it come from? My income is wrong too.

1 Contribution
0 People Helped

very helpful information.

Reply by
gmc91

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11 People Helped
Helpful to 11 out of 12 people

I know this is very late, but I just now stumbled upon this page... I found that if you click on your personal information (located at the top of the page with your username - drop down menu), you can edit your annual income.  This should change your DTI.  As for the incorrect debt some people are commenting on, I do not have an answer to that.  I am new here, and I am learning as I go.

5 Contributions
43 People Helped

Helpful to 28 out of 30 people

Not mentioned in this article is one more reason to keep your DTI as low as possible: if your income is unexpectedly reduced, a low DTI will reduce any adverse effect on your credit score. Essentially, it is a prophylactic (protective) measure against downturns in your personal finance situation.

Reply by
shellnlq

1 Contribution
15 People Helped
Helpful to 15 out of 17 people

Thanks for the additional info. That is good to know

1 Contribution
7 People Helped

Helpful to 7 out of 7 people

Make sure if applying for credit card, use the card and pay off balance in few months or when u can.faster the better!

6 Contributions
13 People Helped

Helpful to 9 out of 10 people

If you are an authorized user on someone else's account, does this show up as your credit also? 

Reply by
davidweeks256

2 Contributions
7 People Helped
Helpful to 7 out of 10 people

Yes,  that is why my credit usage is where it is, due to being an authorized user with a limited amount of credit on an account that belongs to my fiance.

2 Contributions
7 People Helped

Helpful to 7 out of 9 people

No matter what value I put in as my monthly income it always shows $1,250 and also says my monthly debt is $791 for DTI of 63% (a terrible score).  My income is >$10k a month and I have no debt other than mortgage so I'm not sure how to get this piece working.  When I go to the screen to enter my income, it shows what I typed in last - but the score center refuses to show anything but the $1250/$791 number.  :-(  Ideas?

Reply by
Aero10

2 Contributions
32 People Helped
Helpful to 5 out of 8 people

I have EXACTLY the same issue, but in my case I have solid income from two government retirements and ZERO debt. No car payments, mortgages and nothing on the credit cards.

So how is it that I have the same $1,250 payments and yet I have ZERO?

1 Contribution
2 People Helped

Helpful to 2 out of 3 people

I don't see the debt to income calculation on here. Where do i find it?

1 Contribution
6 People Helped

Helpful to 6 out of 6 people

why is my rating so low.  I don't owe anything on it, nor do I have one bill that is past due, Please help me.   

All of our credit report information comes straight from your TransUnion credit report. Check your full credit report at AnnualCreditReport.com for more information.

Review by
CK Moderator

1 Contribution
2 People Helped

Helpful to 2 out of 3 people

This article was helpful in learning about credit scores and how they are determined

1 Contribution
7 People Helped

Helpful to 7 out of 9 people

Does debt payments include your utility payments and things like that?

Reply by
AllSeasonRadial

5 Contributions
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Helpful to 10 out of 12 people

@musictonya: utility payments, telephone bills, cable TV, rent (or mortgage payments) and so on are better regarded as "fixed expenses". Fixed expenses are the costs you can expect to remain the same month after month for long periods of time.

Fixed expenses are the easiest to budget for, because they are the easiest to prioritze—  for instance, rent gets paid before the cable TV bill. Fixed expenses always top the list of bills to be paid; any money left after that is "discretionary". Fixed expenses are the best way to decide if you are living above or below your means.

Having a clear understanding of your own personal fixed expenses is the best way to decide whether you need to adjust your lifestyle to match your income (to attain your financial goals or to meet financial obligations, for instance). And if you decide to adjust your lifestyle (either up or down), the clear understanding of your fixed expenses is absolutely crucial to doing it in the most effective and painless way.

Reply by
kimproctor2002

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Helpful to 7 out of 8 people

no, they mean credit cards and loans.

Reply by
happi2007

1 Contribution
0 People Helped

no debt payments does not include utility, water,phone,groceries etc. thats what they want to know. so if you do qualify  the company wants to know if you have enough to live on. that is what i was told.

Reply by
patchesofohio

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0 People Helped

Debt payment includes any payment that has an interest rate on it.  It does not includes utitility bills.

2 Contributions
2 People Helped

Helpful to 1 out of 1 people

CreditKarma has my dti set at a number no where near my actual monthly payments. I have 2 loans that ae in good standing that should improve my score and they cant find them plus it would increse my dti

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