How to calculate DTI ratio?

DTI is calculated by dividing your total monthly debt payments by your gross monthly income, then multiplying by 100 to get a percentage. Total monthly debt includes home loan EMI or rent, car loan EMI, personal loan EMI, education loan EMI, credit card minimum payments, and any other EMI payments. Gross monthly income is your income before taxes and deductions. Formula: DTI = (Total Monthly Debt / Gross Monthly Income) x 100.

What is the 28/36 rule?

The 28/36 rule is a lending guideline that states a household should spend no more than 28% of gross monthly income on housing expenses (front-end DTI) and no more than 36% on total debt payments including housing (back-end DTI). Indian lenders do not follow this rule formally but use a similar logic with FOIR limits, usually between 40% and 55% depending on the loan type.

Does DTI affect credit score?

DTI does not directly affect your credit score. Credit bureaus like CIBIL, Experian, and Equifax calculate credit scores based on payment history, credit utilisation, credit mix, length of credit history, and new credit inquiries. However, a high DTI increases the risk of missed payments, which in turn damages your credit score over time. Lenders consider both DTI and CIBIL score together when evaluating loan applications.

What is the difference between DTI and FOIR?

DTI (Debt-to-Income Ratio) and FOIR (Fixed Obligation to Income Ratio) measure the same concept: how much of your income goes toward debt payments. The difference is mostly terminological. FOIR is the term preferred by Indian banks and NBFCs, while DTI is more common internationally. Indian lenders use FOIR when calculating home loan eligibility, personal loan eligibility, and credit card approval.

What is the difference between debt-to-income ratio and debt-to-credit ratio?

These are two different metrics that get confused often. Debt-to-income ratio compares your monthly debt payments to your monthly income, and lenders use it to judge repayment capacity. Debt-to-credit ratio (also called credit utilisation) compares your outstanding credit card balances to your total credit card limit, and it is a factor in your credit score calculation. A low DTI does not guarantee a low debt-to-credit ratio, and the two are checked separately by lenders and credit bureaus.

How to lower your DTI ratio?

Lower your DTI by reducing your total monthly debt or increasing your monthly income. Pay off credit card balances to reduce minimum payments. Prepay high-interest personal loans. Avoid taking on new EMIs. Refinance existing loans to lower monthly payments. Increase income through a raise, a side business, or rental income.

What DTI do I need for a home loan?

Most Indian banks and housing finance companies prefer a FOIR below 50% for home loan approval. Some lenders accept up to 55% for applicants with strong credit profiles. A DTI below 36% significantly improves your chances of approval and helps you qualify for a higher loan amount. Public sector banks tend to be more conservative, often capping FOIR at 40 to 45%.

What DTI do I need for a personal loan?

Personal loan lenders in India typically prefer a FOIR below 40 to 50% after including the new loan EMI. Since personal loans are unsecured, lenders are more conservative with DTI thresholds compared to secured loans like home loans.

What DTI do I need for a car loan?

Car loan lenders in India typically expect a FOIR below 45 to 50% after accounting for the new car loan EMI. Since the vehicle serves as collateral, car loan DTI requirements are slightly more lenient than personal loans but stricter than home loans.

What is front-end DTI vs back-end DTI?

Front-end DTI (also called the housing ratio) includes only housing-related expenses: home loan EMI or rent, property taxes, and insurance. Back-end DTI includes all monthly debt payments: housing costs plus car loans, personal loans, education loans, credit card minimum payments, and any other EMIs. Most Indian lenders focus primarily on the back-end figure when calculating FOIR.

What is the difference between DTI and credit score?

DTI measures how much of your income goes toward debt payments. Credit score measures how reliably you have repaid debt in the past. Lenders use both: DTI tells them if you can afford new debt, and the credit score tells them if you are likely to repay it on time. A high credit score cannot compensate for a very high DTI, and vice versa.

How do lenders use DTI when underwriting a loan?

Lenders calculate your FOIR at the start of underwriting, before checking your credit score in detail. If FOIR exceeds their policy threshold for that loan type, the application is usually declined or the sanctioned amount is reduced, regardless of how strong the rest of the application looks. DTI acts as a first filter on repayment capacity, and the credit score and other checks follow only if that filter is cleared.

How can I check if I can afford a new EMI before applying?

Add the proposed new EMI to your current total monthly debt and recalculate DTI using your existing income. If the resulting DTI stays under the threshold typical for that loan type (50 to 55% for a home loan, 40 to 50% for a personal loan), you have a reasonable chance of approval. Use the Proposed New Loan field in this calculator's More Settings to see your DTI before and after in one view.

Does DTI include rent if I don't have a home loan?

For your own financial planning, yes: rent is a fixed monthly housing obligation and should be included the same way a home loan EMI would be. Some lenders exclude rent from FOIR since it is not a credit obligation reported to a bureau, but including it gives a more honest picture of how much of your income is actually free each month.

Should I include my spouse's income and debt in DTI?

Only if you are applying for a joint loan or the lender is assessing household income together. For an individual loan application, use only your own income and your own debt obligations. If you are applying jointly, most lenders combine both incomes and both sets of debt to calculate a single household DTI.

What is the maximum DTI banks in India will approve?

There is no single fixed number since every lender sets its own FOIR policy. As a general range, most banks and NBFCs cap FOIR between 50% and 60% for secured loans like home loans, and between 40% and 50% for unsecured loans like personal loans and credit cards. A DTI above 60% is rejected by nearly all mainstream lenders regardless of loan type.

How is DTI calculated for self-employed applicants?

Lenders typically average net profit after tax across the last 2 to 3 years of ITR filings rather than using a single year, and often require a CA-certified profit and loss statement. FOIR ceilings for self-employed applicants also tend to be a little stricter than for salaried applicants on the same loan type, since the income carries more year-to-year uncertainty.

Does adding a co-applicant improve my DTI?

It can. A joint application combines both applicants' income and debt into one household DTI. If the co-applicant has a strong income relative to their own debt, the combined ratio usually improves. A worked example: an individual DTI of 40% (High) can drop to 27.5% (Fair) once a spouse's income and debt are added, depending on their specific numbers.

Does the same amount of debt mean the same DTI for everyone?

No. DTI depends on income as much as debt. Rs 30,000 in monthly debt is a Very High 60% DTI at Rs 50,000 income, but only a Good 15% DTI at Rs 2,00,000 income. The same debt figure can fall in almost any category depending on the applicant's income.

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Debt-to-Income Ratio Calculator: DTI & FOIR | Fermor

What Is Debt-to-Income Ratio?

Debt-to-Income Ratio (DTI) is the percentage of your gross monthly income that goes toward paying debt obligations each month. It is the primary metric lenders use to judge whether you can afford a new loan.

Every time you apply for a home loan, a car loan, a personal loan, or a credit card, the lender calculates your DTI, which Indian banks and NBFCs usually call FOIR (Fixed Obligation to Income Ratio). If the ratio exceeds their threshold, the application is typically declined regardless of your credit score.

A lower ratio means more of your income is free to service new debt, which makes you a lower-risk borrower in the lender's underwriting model.

DTI Formula: How to Calculate Debt-to-Income Ratio

The formula is a single division:

DTI = (Total Monthly Debt Payments / Gross Monthly Income) x 100

Component	What It Includes
Total Monthly Debt	Home loan EMI or rent, car loan EMI, personal loan EMI, education loan EMI, credit card minimum payment, and other EMIs
Gross Monthly Income	Salary before tax and deductions, freelance income, rental income, and other regular income

Worked example: monthly income of Rs 1,50,000, with Rs 35,000 in home loan EMI, Rs 8,000 in car loan EMI, and a Rs 3,000 credit card minimum payment. Total monthly debt is Rs 46,000. DTI = (46,000 / 1,50,000) x 100 = 30.7%, a Fair rating by most lenders.

Front-End vs Back-End DTI: The 28/36 Rule

Front-end DTI (the housing ratio) counts only housing costs: home loan EMI or rent, property tax, and home insurance. Back-end DTI counts every monthly debt payment, housing included.

Worked example at Rs 1,50,000 monthly income: housing costs Rs 35,000, car EMI Rs 8,000, personal loan Rs 5,000, credit card minimum Rs 3,000. Front-end DTI = 35,000 / 1,50,000 = 23.3%. Back-end DTI = (35,000 + 8,000 + 5,000 + 3,000) / 1,50,000 = 34.0%.

The 28/36 rule, common in US mortgage underwriting, caps front-end at 28% and back-end at 36%. Indian lenders do not formally use this rule, but their FOIR policies follow the same logic with different numbers, usually a single combined limit between 40% and 55% depending on the loan type.

What Is a Good DTI Ratio?

A DTI below 36% is considered good. Below 15% is excellent. Between 25% and 36% is fair. Between 36% and 43% is high. Above 43% is very high and most lenders will reject the application outright.

DTI Range	Category	Loan Approval Likelihood
Below 15%	Excellent	Very high approval chances, top-tier rates
15% to 25%	Good	Strong approval, standard rates
25% to 36%	Fair	Approved in most cases, may see rate adjustments
36% to 43%	High	Approval challenges, limited lender options
Above 43%	Very High	Likely rejection without debt reduction

These bands are general guidance, not a fixed pass or fail line. Indian lenders work with FOIR limits between 40% and 55%, and the exact cutoff depends on the loan type, your credit score, and the specific lender's internal policy.

DTI vs FOIR: What Is the Difference?

DTI and FOIR (Fixed Obligation to Income Ratio) measure the same thing: the share of monthly income already committed to debt payments. The calculation is identical. FOIR is simply the term Indian banks, housing finance companies, and NBFCs use; DTI is the international term.

Aspect	DTI	FOIR
Full form	Debt-to-Income Ratio	Fixed Obligation to Income Ratio
Region	International (US, Europe)	India
Formula	Total Debt / Income x 100	Total Fixed Obligations / Income x 100
Typical threshold	36% (28/36 rule, US)	40% to 55%, per lender policy
Used by	Global lenders, mortgage underwriters	Indian banks, NBFCs, HFCs

DTI vs Debt-to-Credit Ratio: Don't Confuse These Two

Debt-to-income ratio and debt-to-credit ratio sound similar but measure different things, and mixing them up is a common mistake.

Metric	What It Measures	Used For
Debt-to-Income Ratio (DTI)	Monthly debt payments divided by monthly income	Loan and credit application underwriting
Debt-to-Credit Ratio (Credit Utilisation)	Outstanding credit card balance divided by total credit card limit	A factor in your CIBIL and other credit scores

A borrower can have a comfortable DTI while still carrying a high debt-to-credit ratio on one card, since the two are calculated from entirely different numbers. This calculator computes DTI only; check your credit card statement or credit report for your debt-to-credit figure.

How Lenders Use DTI to Decide Your Loan Eligibility

DTI is usually the first filter in a lender's underwriting process, calculated before the file goes to a detailed credit assessment.

FOIR threshold check: The lender compares your FOIR after the new EMI to their internal policy limit for that loan type. Exceeding it typically means an automatic decline or a reduced sanction amount, independent of your credit score.

Loan amount sizing: For secured loans like home loans, lenders often work backward from the maximum FOIR to determine the highest EMI, and therefore the highest loan amount, you can be offered.

Combined with credit score: A borrower can clear the FOIR check and still be declined on credit score, and vice versa. Lenders in India generally require both a FOIR within policy and a CIBIL score above a set minimum, commonly around 700 to 750.

Stated vs verified income: Salaried applicants usually verify income through payslips and Form 16. Self-employed applicants often go through a more detailed income assessment, which can change the income figure the lender actually uses for the FOIR calculation.

DTI for Self-Employed and Business Owners

Self-employed applicants go through the same DTI formula, but getting to the income figure the lender actually uses takes more work than for a salaried applicant.

Income is averaged, not a single payslip: Lenders typically average net profit (after tax) across the last 2 to 3 years of ITR filings, rather than using the most recent year alone, to smooth out year-to-year business fluctuations.

Business debt can be counted separately: Existing business loans, overdraft facilities, and working capital loans may be assessed alongside personal debt, depending on how the applicant's finances are structured and whether the business is a proprietorship.

A CA-certified income statement is often required: Beyond ITRs and bank statements, many lenders ask for a CA-certified profit and loss statement to confirm the declared income before finalising the FOIR calculation.

FOIR limits tend to be stricter: Because verified income carries more uncertainty than a fixed salary, several lenders apply a slightly lower FOIR ceiling, or require a lower loan-to-value ratio, for self-employed applicants on the same loan type.

How Joint Applications and Co-Applicants Affect DTI

Adding a co-applicant combines both income and both debt into a single household DTI, which can meaningfully change the outcome.

Worked example: Applicant 1 earns Rs 70,000 a month with Rs 28,000 in existing debt, a solo DTI of 40% (High). Applicant 2, a spouse, earns Rs 50,000 with Rs 5,000 in debt. Applying jointly combines both: income of Rs 1,20,000 and debt of Rs 33,000, a joint DTI of 27.5%, moving the category from High to Fair.

This works in both directions. A co-applicant with a strong income and low debt improves the combined DTI, while a co-applicant who brings more debt than income can push the combined ratio higher than either applicant's individual number. Most lenders require the co-applicant to also meet minimum credit score requirements, not just contribute income.

Checking Whether You Can Afford a New EMI

Before applying for a new loan, add the proposed EMI to your current debt and recalculate DTI using your existing income. Set the Proposed New Loan / EMI field in More Settings above and the N-Year DTI Projection section will factor it into every year shown.

Worked example: monthly income of Rs 1,00,000, current debt of Rs 33,000 (home EMI Rs 25,000 plus car EMI Rs 8,000), a current DTI of 33% (Fair). A proposed new personal loan EMI of Rs 15,000 would take total debt to Rs 48,000, a DTI of 48%, moving the category to Very High and putting the application at real risk of rejection at most lenders.

Running this check before applying, rather than after a rejection, avoids a hard credit inquiry that can itself have a small, temporary effect on your credit score.

DTI Benchmarks by Loan Type in India

Lenders adjust their FOIR limits by loan type, based on tenure, whether the loan is secured, and how the loan is typically used.

Typical FOIR ceilings used by Indian lenders. Approximate; varies by lender and applicant profile.
Loan Type	Typical Max FOIR	Notes
Home Loan	50% to 55%	Long tenure (20-30 years), secured by property, most lenient FOIR
Personal Loan	40% to 50%	Unsecured, shorter tenure (1-5 years), stricter thresholds
Car Loan	45% to 50%	Secured by the vehicle, moderate tenure (3-7 years)
Education Loan	45% to 55%	Some lenders factor in future earning potential
Credit Card	40% to 50%	Issuers check both DTI and credit utilisation together

DTI Across Income Levels: A Reference Table

The same rupee amount of debt lands in a completely different DTI category depending on income. This table holds monthly debt fixed at Rs 30,000 and varies only income, to show how much category alone depends on the income side of the formula.

DTI at a fixed Rs 30,000 monthly debt, across income levels.
Monthly Income	DTI at Rs 30,000 Debt	Category
Rs 50,000	60.0%	Very High
Rs 75,000	40.0%	High
Rs 1,00,000	30.0%	Fair
Rs 1,50,000	20.0%	Good
Rs 2,00,000	15.0%	Good
Rs 3,00,000	10.0%	Excellent

The same Rs 30,000 in monthly debt swings from Very High at Rs 50,000 income to Excellent at Rs 3,00,000 income. This is why DTI is always calculated fresh for each applicant rather than judged from the debt amount alone.

How to Improve Your DTI Ratio

There are exactly two ways to lower DTI: reduce monthly debt, or increase monthly income. Every practical strategy falls into one of these two categories.

Pay off credit card balances: The minimum payment on a credit card is calculated as a percentage of the outstanding balance, so paying it down reduces both total debt and the monthly minimum, improving DTI immediately.

Prepay high-interest loans: A lump-sum prepayment on a personal loan or consumer loan reduces the outstanding principal. Choosing reduced EMI over reduced tenure at the time of prepayment lowers your monthly obligation and your DTI.

Avoid taking new EMIs: Every new EMI adds to monthly debt. Until DTI is comfortably below 36%, financing a purchase through cash or a debit card instead of a new EMI keeps DTI from climbing further.

Increase your income: A raise, a side income, or rental income all increase the denominator in the DTI formula. Even a modest income increase can move DTI from a high category to a fair one.

Refinance existing loans: If rates have dropped since a loan was taken, refinancing can lower the EMI on the same outstanding balance, directly reducing monthly debt.

Common Mistakes When Calculating DTI

Worked example of the most common one: income Rs 80,000, home EMI Rs 20,000, car EMI Rs 6,000. Leaving out a Rs 4,000 credit card minimum payment gives a DTI of 32.5% (Fair). Including it gives 37.5% (High), a different category entirely from one omitted line.

Forgetting a debt line entirely: Credit card minimum payments and smaller personal loans are the two most commonly left out, and both push the real DTI higher than the number a borrower expects.

Using net (take-home) income instead of gross income: The standard DTI formula uses gross income before tax and deductions. Using net income instead understates the denominator and overstates DTI.

Excluding rent when there is no home loan: Rent is a genuine fixed monthly obligation for financial planning purposes, even though some lenders do not count it in a formal FOIR calculation since it has no credit bureau record.

Comparing DTI across lenders as if it were one fixed number: Each lender sets its own FOIR ceiling. A DTI that clears one bank's policy can still be declined by a more conservative lender for the same loan type.

Limitations of DTI Ratio

Ignores living expenses: DTI measures debt against income only. It does not account for utility bills, groceries, insurance premiums, or other non-debt costs, so two borrowers with identical DTI can have very different amounts of disposable income left over.

Does not capture assets or savings: A borrower with substantial fixed deposits and a DTI of 40% is often a safer credit risk than a borrower with no savings and a DTI of 30%, but DTI alone does not reflect that financial cushion.

Varies by lender: One bank may accept a DTI of 42% that another declines. DTI is not a universal pass or fail threshold, which is why shopping across lenders can matter.

This calculator's "max recommended new debt" figure assumes a flat 36% back-end threshold: Real lender policy for a specific loan type may be higher or lower than 36%, so treat that figure as a general planning guide, not a lender-specific pre-approval number.

Key Takeaways

DTI below 36% is the general "good" line, but Indian lenders work in FOIR terms with limits typically between 40% and 55% depending on the loan type.
Forgetting one debt line, most often a credit card minimum payment, is the single most common calculation mistake and can shift the result into a different lending category entirely.
Checking DTI with a proposed new EMI added, before applying, avoids a rejected application and an unnecessary hard credit inquiry.
DTI and debt-to-credit ratio (credit utilisation) are different metrics used for different purposes: one for loan underwriting, the other as a factor in your credit score.

How to Use This DTI Calculator

Enter your monthly income: use a quick preset or the slider for your gross monthly income before tax.
Add your debt payments: housing, vehicle, and personal loan are on the main screen; open More Settings for education loan, credit card minimum, and other EMIs.
Review your DTI: the result panel shows your ratio, category, remaining income, and the maximum new debt a flat 36% threshold would allow.
Project ahead: in More Settings, set a Proposed New Loan / EMI, an expected annual income growth rate, and a number of years, then open N-Year DTI Projection to see how your DTI evolves.

DTI Glossary: Key Terms Explained

Term	Meaning
DTI (Debt-to-Income Ratio)	Total monthly debt payments divided by gross monthly income, expressed as a percentage.
FOIR (Fixed Obligation to Income Ratio)	The Indian banking term for the same calculation as DTI.
Front-End DTI	The share of income going only to housing costs: EMI or rent, property tax, and home insurance.
Back-End DTI	The share of income going to all monthly debt payments combined, housing included.
Gross Monthly Income	Income before tax and deductions, the denominator in the DTI formula.
Debt-to-Credit Ratio	Outstanding credit card balance divided by total credit limit, a different metric used in credit scoring.
Underwriting	The lender's process of assessing an application, including the DTI/FOIR check, before approving a loan.

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Frequently Asked Questions

Debt-to-income ratio (DTI) is the percentage of your gross monthly income that goes toward debt payments each month. It is calculated by dividing total monthly debt obligations by gross monthly income. Lenders use DTI to assess your ability to manage monthly payments and repay borrowed money. In India, the term FOIR (Fixed Obligation to Income Ratio) is more commonly used, though both measure the same concept.

Disclaimer: This DTI calculator is for educational and planning purposes only. DTI thresholds vary across lenders and are one of several factors considered during loan approval, including CIBIL score, employment history, and asset profile. Results are indicative and do not constitute loan pre-approval, financial advice, or a guarantee of loan sanction. Consult a SEBI-registered financial adviser or your lender for a definitive eligibility assessment.