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# Debt To Income Calculator | Credit Risk Calculator

Calculate your debts in comparison to income to calculate your househould income in terms of debt-to-income ratio to provide your credit rick rating.

 Monthly Income Your Gross Monthly Income Your Partner's Gross Monthly Income Alimony / Child Support Any Other Regular Income Monthly Debt Payments Rent / Mortgage Property Taxes HOA Dues / Fees Homeowners' Insurance Car Loan Personal Loan Student Loan Min. Credit Card Pmt. Alimony / Child Support Other Debt
 Your Debt-to-Income (DTI) Ratio is: Back-End Debt-to-Income Ratio: Front-End Debt-to-Income Ratio: Total Monthly Income: Total Monthly Debt:

## Use the Debt-to-Income Calculator to Know Your Financial Capacity

What is a debt-to-income ratio? Debt-to-Income or DTI ratio is a standard measure of your financial condition that the lenders need to look at before approving your loan. The DTI ratio is not just for new loans, it is also a crucial tool for you to monitor your financial condition. Your debt-to-income ratio represents a comparison of your monthly debt payments to monthly gross income. Calculating this enables you to know the percentage of your income that goes towards the monthly repayments of debts. Your financial flexibility totally depends on this. Now the question is:

## How to calculate my Debt-to-Income ratio?

The following are the steps to calculate the debt-to-income ratio:

• Add the recurring monthly debt, including the mortgage payments or rent, credit cards, personal loans, student loans or child support, if any of these things apply to you.
• Add up the monthly income including the gross wages before the tax and national insurance deductions. You should also add any freelance income or investment profits that you might receive.
• The last step would be to divide the monthly debt by the monthly income and then multiply the answer by 100.

Sounds a little tedious, right? It seems tiring when you are forced to do it manually, especially for first timers, who are still trying to understand how to calculate DTI. But, thankfully technology solved this problem for everyone a long time ago. Rarely do we come across people performing manual calculations for DTI as there are online tools available for them. The Debt-to-Income calculator by iCalculator is good calculator for DTI that gives instant calculation of your debt-to-income ratio.

A DTI calculator is the perfect tool for you whether you are preparing for a loan or reviewing your finances. Simply enter information into the calculator including taxes, car loan, monthly gross income, etc. and the calculator shows you your debt-to-income ratio in a jiffy. It's easy, quick and error free. That simple!

The DTI ratio is often used in credit score calculations to understand whether you will be able to cope any sudden financial changes. Also, the tool is the ideal way to gauge whether you will be accepted for a loan based on your financial capability to manage additional monthly repayments.

## Why does the debt-to-income ratio matter?

A low debt-to-income ratio is an ideal condition as it highlights a positive balance between the income and the debt. It also suggests that you will be able to pay off the loan without much trouble. A high debt-to-income ratio suggests that you already have too much debt to repay and there is a constant struggle to pay existing expenses.

Banks and other financial institutions that are responsibility for providing credit, have their own definition of what is an acceptable debt-to-income ratio. As already discussed, the lower debt-to-income ratio is the certain precursor of whether you are likely to receive the amount of credit you are applying for.

## What does a good debt-to-income ratio mean?

Lenders have different ways of finding out who should or who should not receive a loan. You should be aware of two kinds of ratios for applying for a loan.

### Front-end-debt-to-income ratio

Some lenders prioritise certain debt payments over others. A front-end debt-to-income ratio covers mortgage payments, housing expenses, homeowner's insurance and property taxes.

### Back-end debt-to-income ratio

Back-end debt-to-income ratio provides a better picture of debt burden. Some lenders are more interested in the back-end debt-to-income ratio as this includes everything from student loan to child maintenance as well as credit card payments.