How to calculate debt-to-income ratio?
Debt-to-income ratios are pretty simple to calculate. All you need to know is the amount of monthly debt payments and the amount of monthly income. Then, you plug them into this formula:
D = monthly total debt
I = monthly total gross income
DTI = D / I
So, if your monthly debt totaled $1500 and your monthly gross income totaled $4000, your debt to income would work like this:
$1500 / $4000 = 0.375 or 37.5%, which is a pretty decent DTI for most purposes.
Debts that are included are those that have a regular payment involved – things like mortgages, notes, and revolving credit.