This debt to income ratio calculator will help you to quickly calculate the all-important vital sign of your financial well-being.
If you're serious about achieving the financial freedom to choose your work based on how much joy and fulfillment it brings you, then you must be continually aware of your debt to income ratio (DTI).
DTI is a financial snapshot often used by lenders to determine the probability that you will be able to repay the money you are looking to borrow. Most lenders require a DTI of 36% or less to qualify you for financing. However, DTI is also an easy and invaluable way to track your progress toward achieving financial freedom.
Simply add up all of your monthly debt payments and divide by your total monthly income. If the DTI is smaller than your last ratio then you're likely moving closer to financial freedom. Larger means you are likely moving further away from it.
Be sure to visit this debt to income ratio calculator at least once every two months to recalculate your DTI to make sure you keep moving in the direction of financial freedom.
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Gross Income: Your total income before taxes and deductions are taken into account. The above DTI calculator asks for your Gross Income only because that's the figure lenders use. However, if you are tracking your DTI for purposes other than qualifying for a loan, feel free to enter your Net Income (after taxes and deductions) instead. Just be sure to use the same method each time you return to this tool.
Debt to Income Ratio (DTI): A personal finance measurement often used by lending institutions to determine your ability to repay a loan. Most lenders require a DTI of 36% or less in order to qualify you for a loan. However, DTI is also an invaluable way to track your progress toward achieving financial freedom.
DTI Levels: While DTI levels vary slightly among "financial experts," the following levels are generally accepted.