DTI is calculated by dividing total monthly debt payments (housing, loans, minimum credit card payments) by gross monthly income. Lenders use it to gauge whether you can take on more.
Below 36% is generally considered healthy; above 43% and most mortgage lenders start declining. A lower DTI also frees mental bandwidth — every payment is one less claim on your future income.
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How is DTI different from utilization?
DTI compares monthly payments to monthly income. Utilization compares credit card balances to credit limits. Both matter, but for different decisions.
Related terms
Credit score
A three-digit number that estimates how reliably you repay borrowed money.
APR (annual percentage rate)
The yearly cost of borrowing, including interest and most fees, expressed as a percentage.
Budget
A plan for how you'll spend and save money over a given period.
Mortgage
A long-term loan secured by real estate, usually repaid over 15–30 years.