Mortgage calculator with debt-to-income ratio
Two pieces of arithmetic and nothing more: your monthly debt divided by your gross monthly income, and a principal-and-interest payment built from the amount, rate and term you enter. It does not decide whether anyone qualifies.
12 × 12 = 144
Adding 12 to itself 12 times gives the same answer.
What this page does, and what it does not
It performs two transparent calculations on numbers you type in. First, debt-to-income: your monthly debt payments divided by your gross monthly income. Second, a principal-and-interest payment worked out from a loan amount, a rate and a term of your choosing.
It does not tell you whether you qualify, and it does not tell you how much you can borrow. Lenders set their own debt-to-income thresholds and their own underwriting rules, and they count income and obligations in their own way; two lenders reading the same figures reach different conclusions. The payment step covers principal and interest only — property tax, insurance, association fees and mortgage insurance all sit outside it, and a real housing cost includes them. There is no approval verdict here and no affordability figure.
Step one: the ratio
DTI = monthly debt payments ÷ gross monthly income. Multiply by 100 to read it as a percentage. Payments of 1,800 against gross income of 6,000 give 1,800 ÷ 6,000 = 0.3, so 30%.
- Gross monthly income is pay before tax: annual pay divided by 12, not weekly pay times 4.
- Debt payments are the monthly bills — car, student loan, card minimums — not the balances owed. A card with 6,000 outstanding and a 120 minimum counts as 120.
- Divide, then multiply by 100.
Step two: the principal-and-interest payment
Work in months. The monthly rate is the annual rate as a decimal divided by 12, so 6% is 0.06 ÷ 12 = 0.005, and the term is years times 12. The payment is the loan amount multiplied by the monthly rate, divided by 1 minus (1 + monthly rate) raised to the power of minus the number of months. Every input is yours; change one and the payment moves.
When the answer looks wrong
- Net instead of gross. Take-home pay makes the ratio look far worse than a lender would read it.
- A ratio above 1. Income and debt went into the boxes the wrong way round.
- An absurd payment. The rate went in as 6 rather than 0.005 a month, or the term in years rather than months.
- Income that is not steady. Bonus, overtime and self-employed pay are averaged over a longer period, so a good month is not the figure to use.
The percentage step itself is set out in how to find a percentage on a calculator. More money arithmetic sits in the calculators index, including the annual percentage yield calculator.