Debt Ratio Calculator

For individuals, a debt-to-asset ratio below 36% is considered healthy. Below 20% is excellent. Above 50% indicates more liabilities than assets, which can be risky. Businesses aim for under 50% to maintain creditworthiness.

DTI is the percentage of monthly gross income that goes toward debt payments. Lenders use it to assess borrowing capacity. A front-end DTI under 28% (housing only) and back-end DTI under 36-43% are lender requirements for most mortgages.

Most conventional lenders want total DTI under 43%. FHA loans allow up to 50% with compensating factors. Keeping DTI under 36% gives you the best loan options and rates. VA loans are more flexible but still review DTI.

Include all monthly minimum payments: mortgage/rent, car loans, student loans, credit card minimums, personal loans, child support/alimony. Do not include utilities, insurance, food, or other living expenses.

Debt-to-equity compares total debt to net worth (equity). A ratio of 1.0 means you owe as much as you own. Below 1.0 is conservative; above 2.0 is high leverage. Businesses use it extensively; for individuals it shows leverage.

Pay down high-interest debt first (avalanche method) or smallest balances first (snowball method). Avoid taking on new debt. Increase assets through savings and investments. Even modest debt reduction significantly improves your ratios over time.