How much of your income is used up paying monthly debt payments?
Our debt to income ratio calculator compares your monthly take-home with your monthly debt payments. Lenders use the debt to income ratio to determine how much debt you can carry. We use the same debt ratio calculator to see how healthy your debt load is. A ratio of 36% or less is considered healthy, above 50% and you should consider talking to a debt expert.
Is your debt to income ratio too high?
1. Calculate Your Income
2. Calculate Your Debt Payments
36% or less: Good. Most lenders consider a ratio of 36% or less a healthy debt load.
A word of caution: If you included only the minimum payments on your credit card debt your ratio will be understated. Paying only the minimum balance each month will keep you in debt. Use our credit card repayment calculator to find out what your payments should be.
37-42%: Manageable. While you may be able to manage with a ratio this high, you are at the maximum range of acceptable. Start working to reduce your debt now and make sure you have adequate savings set aside for emergencies.
A word of caution: If you included only the minimum payments on your credit card debt your ratio will be understated. Paying only the minimum balance each month will keep you in debt. If you are struggling making even those payments it may be time to talk to a professional.
43-49%: Cause for Concern. Make a household debt management plan to start paying down your debts to avoid trouble down the road. If you are making only minimum payments on your credit card debt, you may need help dealing with your debts. Talking to an expert is the best way to get tailored advice and get out of debt faster. Contact an advisor to get free, expert advice on dealing with your debt.
50% or more: Dangerous. You should make a plan to aggressively pay off your debts. At this level you may want to consider seeking professional help to severely reduce your debt.