What is a good debt-to-income ratio?

A DTI below 36% is considered good by most lenders. Below 15% is excellent. Between 25% and 36% is fair. A DTI between 36% and 43% is considered high and may make loan approval difficult. Above 43% is very high and most lenders will reject applications. For home loans in India, lenders typically prefer a FOIR below 50%, though a lower ratio improves approval chances and may qualify you for a larger loan amount.

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). The 28% covers mortgage or rent, property taxes, and insurance. The 36% covers all debt payments including housing, car loans, personal loans, credit cards, and education loans. Indian lenders use similar but adjusted benchmarks.

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 do 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 largely terminological. FOIR is the term preferred by Indian banks and NBFCs, while DTI is more common in the US and global finance. Indian lenders use FOIR when calculating home loan eligibility, personal loan eligibility, and credit card approval. The formula is identical: FOIR = (Total Fixed Obligations / Monthly Income) * 100.

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. Making a lump sum prepayment on your home loan reduces the outstanding principal and, if you opt for reduced EMI, lowers your monthly obligation.

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%. Per RBI guidelines, lenders must assess repayment capacity before sanctioning home loans.

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. This means if your current FOIR is 30% and the new personal loan takes it to 42%, you may still be approved. Since personal loans are unsecured, lenders are more conservative with DTI thresholds compared to secured loans like home loans. A CIBIL score above 750 combined with a DTI below 40% gives the strongest approval chances.

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. Most lenders also require a minimum down payment of 15 to 20% of the car value. A DTI below 40% with a good credit score usually results in faster approval and better interest rates.

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. Lenders typically evaluate both. The 28/36 rule says front-end should be below 28% and back-end below 36%. Most Indian lenders focus primarily on the back-end 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. DTI is a ratio of obligations to income. Credit score is a numerical rating (300 to 900 in India) based on your credit history. Lenders use both: DTI tells them if you can afford new debt, and the credit score tells them if you will repay it on time. A high credit score cannot compensate for a very high DTI, and vice versa.

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Debt-to-Income Ratio Calculator: Calculate Your DTI Ratio | 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 single most important metric lenders use to decide 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 (or FOIR, as Indian banks call it). If the ratio exceeds their threshold, the application gets rejected regardless of your credit score. It is the income-side check on your borrowing capacity.

Per RBI guidelines issued to all scheduled commercial banks, lenders must assess a borrower's repayment capacity before sanctioning credit. The DTI or FOIR calculation is the primary tool for this assessment. A lower ratio means more of your income is free to service new debt, which makes you a safer borrower.

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

The formula is straightforward:

DTI = (Total Monthly Debt Payments / Gross Monthly Income) * 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, other EMIs
Gross Monthly Income	Salary before taxes, freelance income, rental income, business income, investment returns
DTI Result	Percentage. Below 36% is good. Above 43% is very high.

Worked example: Monthly income of Rs 1,50,000. You pay Rs 35,000 in home loan EMI, Rs 8,000 in car loan EMI, and carry a credit card with a minimum payment of Rs 3,000. Total monthly debt is Rs 46,000. DTI = (46,000 / 1,50,000) * 100 = 30.7%. This is considered a fair DTI by most lenders.

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 your application. Indian lenders using FOIR typically set their threshold at 40 to 50%, depending on the loan type and the borrower's credit profile.

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 face rate adjustments.
36% to 43%	High	Approval challenges. Limited lender options.
Above 43%	Very High	Likely rejection. Needs debt reduction.

The 28/36 rule is a useful benchmark. Your housing costs alone should not exceed 28% of your income (front-end DTI). Your total debt payments should not exceed 36% (back-end DTI). Indian lenders often work with FOIR limits between 40% and 55%, especially for home loans where the loan size is large and the repayment period is long.

DTI vs FOIR: What Is the Difference?

DTI (Debt-to-Income Ratio) and FOIR (Fixed Obligation to Income Ratio) measure the same financial metric: the share of your monthly income consumed by debt payments. The calculation is identical. The difference is that FOIR is the term used by Indian banks, housing finance companies, and NBFCs, while DTI is the international standard used in the US, Europe, and global financial reporting.

When an Indian lender asks for your FOIR, they want to know the same thing as DTI: what percentage of your income is already committed to EMIs and other fixed obligations. HDFC, SBI, ICICI Bank, and Bajaj Finserv all calculate FOIR during the loan application process. If your current FOIR is 35% and the new loan EMI would take it to 48%, the lender will assess whether 48% is within their approved threshold.

Aspect	DTI	FOIR
Full form	Debt-to-Income Ratio	Fixed Obligation to Income Ratio
Region	International (US, Europe)	India
Formula	Total Debt / Income * 100	Total Fixed Obligations / Income * 100
Typical Threshold	36% (28/36 rule)	40% to 50% per lender policy
Used by	Global lenders, mortgages	Indian banks, NBFCs, HFCs

How to Improve Your DTI Ratio

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

Pay off credit card balancesCredit cards carry the highest cost of any debt and the minimum payment is calculated as a percentage of the outstanding balance. Paying down your credit card balance reduces both the total debt and the monthly minimum payment, improving your DTI immediately.

Prepay high-interest loansPersonal loans and consumer durable loans have high interest rates. Making a lump sum prepayment reduces the outstanding principal. If you opt for reduced EMI rather than reduced tenure, your monthly obligation drops and your DTI improves.

Avoid taking new EMIsEvery new EMI adds to your monthly debt. Until your DTI is comfortably below 36%, avoid financing purchases through EMIs. Use cash or debit cards instead.

Increase your incomeA raise, a promotion, freelance work, or rental income all increase the denominator in the DTI formula. Even a modest increase in monthly income can move your DTI from high to fair territory.

Refinance existing loansIf interest rates have dropped since you took your loan, refinancing can lower your monthly EMI. A home loan refinanced from 9.5% to 8.5% on a Rs 30 lakh balance over 20 years saves roughly Rs 2,000 per month in EMI.

DTI Benchmarks by Loan Type in India

Different loan types have different DTI thresholds. Lenders adjust their FOIR limits based on the loan's risk profile, tenure, and whether it is secured or unsecured.

Typical FOIR thresholds used by Indian lenders (approximate)
Loan Type	Max FOIR / DTI	Notes
Home Loan	50 to 55%	Long tenure (20-30 years). Secured by property. More lenient FOIR.
Personal Loan	40 to 50%	Unsecured. Shorter tenure (1-5 years). Stricter thresholds.
Car Loan	45 to 50%	Secured by vehicle. Moderate tenure (3-7 years).
Education Loan	45 to 55%	Flexible terms. Some lenders consider future earning potential.
Credit Card	40 to 50%	Revolving credit. Issuers check both DTI and credit utilisation.
Business Loan	40 to 50%	Includes business income assessment. Higher scrutiny.

These are general benchmarks. Each lender sets its own FOIR policy based on internal risk models, and the same lender may offer different rates to different borrowers based on their CIBIL score, employment stability, and relationship with the bank.

Limitations of DTI Ratio

Ignores living expensesDTI only measures debt against income. It does not account for utility bills, groceries, medical expenses, insurance premiums, or other non-debt living costs. Two borrowers with the same DTI may have very different amounts of disposable income left after all expenses.

Does not capture assetsA borrower with Rs 50 lakh in fixed deposits and a DTI of 40% is a safer credit risk than a borrower with no savings and a DTI of 30%. DTI does not reflect your financial cushion.

Varies by lenderOne bank may reject a DTI of 42% while another may approve it. Each lender sets its own FOIR threshold, which means DTI is not a universal pass or fail. Shopping around matters.

Blanks out credit scoreA low DTI does not guarantee approval if your CIBIL score is poor. Lenders evaluate both metrics together. A perfect DTI of 10% with a score of 600 will still be rejected by most lenders.

How to Use This DTI Calculator

Enter your monthly income using the first slider. Then add each debt payment you make every month. The calculator sums them all and shows you your DTI ratio, your DTI category, and the maximum amount you could allocate toward new debt while keeping your DTI at or below the preferred 36% threshold.

Click any input value to type a precise number instead of dragging the slider. Use the More settings button to add education loan debt, credit card minimum payments, and other EMIs. The currency selector converts all displayed amounts to INR, USD, EUR, GBP, or other currencies. Your inputs are saved in your browser, so returning visitors will see their last calculation.

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.