What Is a Good Debt-to-Income Ratio?
4 min read · Last reviewed July 1, 2026
Your debt-to-income ratio, or DTI, is one of the first things a lender looks at. It's a quick measure of how much of your monthly income already goes towards debt — and therefore how much room you have to take on more.
This guide explains how DTI is worked out, what counts as healthy, and the practical steps that move the number in your favour before you apply for anything.
How DTI is calculated
Add up your recurring monthly debt payments — mortgage or rent, car finance, credit card minimums, student and personal loans — then divide by your gross monthly income (before tax) and multiply by 100.
If your debts come to 1,500 a month and you earn 5,000 gross, your DTI is (1,500 ÷ 5,000) × 100 = 30%. Everyday bills like utilities, groceries, and subscriptions usually aren't counted; it's debt repayments that matter here.
What counts as a good DTI
As a rough guide, lenders tend to see a DTI under 36% as comfortable, with no more than about 28% going to housing. Between 36% and 43% is often still acceptable but with less flexibility, and above 43% can start to limit your options.
These are guidelines rather than hard rules — criteria vary by lender and by the type of borrowing — but lower is almost always better. A lower DTI signals you can absorb a new payment without becoming stretched.
How to lower your ratio
There are only two levers: reduce the debt payments in the top of the fraction, or increase the income at the bottom. Paying off a small loan or clearing a card can have an outsized effect because it removes a whole monthly payment.
Avoid taking on new finance in the months before a mortgage application, and think twice before closing to zero any account you might need. If you're planning to borrow, work out your DTI first so there are no surprises when the lender does.
Frequently asked questions
▶Is a 20% debt-to-income ratio good?
Yes — a DTI around 20% is generally considered healthy and gives you plenty of room to take on a mortgage or other borrowing comfortably.
▶Does DTI include rent or my current mortgage?
Yes. Housing costs are part of your monthly debt payments, and lenders often look separately at the housing portion (the front-end ratio) as well as your total DTI.