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Debt-to-Income Calculator

Determining your debt-to-income ratio is one way to check the overall health of your finances. It measures how much pressure debt is putting on your budget, which helps you decide if you can handle more debt.

For example, if you have a debt-to-income ratio of 36%, then 36¢ cents of every dollar earned is going to pay for debt, leaving you 64¢ to pay for everything else.

A high debt-to-income ratio could affect your ability to get additional credit because creditors may be concerned you won’t be able to handle their debt on top of what you already owe.

You can also use the debt-to-income ratio as a benchmark for reducing your debt – as your debt decreases, so will your debt-to-income ratio. This means money is being freed up to use on other things like saving, expenses and emergencies.

What to do

What to do
1

Complete your Debt Log

Figure out your total monthly debt payments. If you have court-ordered fixed payments, such as child support, consider these as debts for this purpose.

2

Figure out your gross monthly income

Your gross monthly income is the amount you receive before taxes and insurance. This includes money earned from a job or child support payments you may receive. If your income varies from month to month, estimate your income on a typical month.

Lenders use your debt-to-income ratio when considering your loan application.

debt-to-income ratio
  Calculate your debt-to-income ratio
 

Enter your total monthly debt payment. Your total monthly debt payment includes credit cards, student, auto, and other loan payments, as well as court-ordered fixed payments, like child support.

 

Divide by your gross monthly income, which is all of your income before taxes and insurance.

 

Multiply by 100 to calculate your current debt-to-income ratio.

Here are some guidelines to think about:

guidelines
 

Homeowner

Consider maintaining a debt-to-income ratio for all debts of 36% or less. Some lenders will go up to 43% or higher. Your home mortgage is included in this ratio.

   

Renter

Consider maintaining a debt-to-income ratio for all debts of 15-20% or less. Your rent is not included in this ratio.

   

If your debt-to-income ratio is higher than the guideline (as either a homeowner or renter), you may want to think about ways to lower debt to put less pressure on your budget.

Mortgage lenders look at your debt-to-income ratios for both total debt and mortgage debt when considering your loan application. If you're a homeowner, you can also calculate your mortgage debt-to-income ratio.

Debt-to-Income Calculator
  Calculate your mortgage debt-to-income ratio
 

Enter your total monthly mortgage debt payment, which includes only the principal and interest on your mortgage. Your property taxes, insurance, and condo or homeowner association fees may or may not be included in your monthly mortgage payment.

 

Divide by your monthly gross income, which is all of your income before taxes and insurance.

 

Multiply by 100 to calculate your current mortgage debt-to-income ratio.

Here are some guidelines to think about:

guidelines2
 

Mortgage debt for homeowners

Consider maintaining a mortgage debt-to-income ratio of 28-35% or less.

       

If your ratio is higher than the guidelines, and you want help, consider contacting a certified HUD housing counselor.

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