1. What is Debt To Income Ratio (DTI)?

Definition: DTI is a personal finance measure that compares an individual's monthly debt payments to their gross monthly income.

Purpose: It helps lenders assess a borrower's ability to manage monthly payments and repay debts. In India, it's commonly used for loan approvals.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( DTI \) — Debt to Income Ratio (percentage)
• \( Debt \) — Total monthly debt obligations (₹)
• \( Income \) — Gross monthly income before taxes (₹)

Explanation: The ratio shows what percentage of your income goes toward debt payments each month.

3. Importance of DTI in India

Details: Indian lenders typically prefer DTI below 40-50%. A lower DTI indicates better financial health and higher loan approval chances.

4. Using the Calculator

Tips: Enter your total monthly debt payments (EMIs, credit cards, etc.) and gross monthly income (before deductions). Income must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What is a good DTI ratio in India?
A: Generally below 40% is good, 40-50% may be acceptable, and above 50% may lead to loan rejection.

Q2: What debts should be included?
A: Include all recurring monthly debts - home loan EMI, car loan, personal loans, credit card payments, etc.

Q3: Does rent affect DTI?
A: Only if you're applying for a home loan - lenders may consider rent as part of your monthly obligations.

Q4: How can I improve my DTI?
A: Either increase your income or reduce your debt payments by paying off loans or consolidating debts.

Q5: Do Indian banks use DTI?
A: Yes, most banks and NBFCs in India use DTI as one of the key metrics for loan eligibility.