What is a good debt-to-income ratio? A debt-to-income (DTI) ratio of 36% or below is generally considered good, and many lenders prefer your total EMIs to stay under 40–43% of your gross monthly income. The lower your DTI, the more comfortably you can take on and repay debt.
Your debt-to-income ratio is the share of your gross monthly income that goes to debt payments. Lenders use it to judge how much more you can safely borrow, so a lower DTI improves both approval odds and the rate you're offered.
Debt-to-income ratio ranges
| Debt-to-income ratio | Rating | What it means |
|---|---|---|
| Below 20% | Excellent | Very comfortable; strong borrowing capacity. |
| 20–36% | Good | Healthy; most lenders are comfortable here. |
| 36–43% | Manageable | Acceptable to many lenders, but stretched. |
| Above 43% | High | Risky; approval is harder and rates higher. |
What affects your debt-to-income ratio
- Total monthly debt payments — EMIs, card minimums, other loans
- Gross monthly income — before tax and deductions
- New loans — each one raises your DTI
- Income changes — a raise lowers your ratio
How to improve it
- Pay down high-EMI debts to lower the ratio
- Avoid taking new loans before a big application
- Increase income where you can
- Refinance or extend tenure to reduce monthly payments
Work out your own numbers — the Debt to Income Ratio Calculator does it instantly, for free, with the formula and a worked example built in.
Related calculators
Continue exploring finance calculators with these tools: SIP Calculator, EMI Calculator, CAGR Calculator, FD Calculator, Effective Annual Rate (EAR) Calculator.