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Debt Ratio Calculator

Last updated 23rd Sep 2022

You can use this debt ratio calculator to figure out if you might be at risk of being denied a loan. In general, lenders apply certain rules when evaluating someone that has applied for credit. In the mortgage industry, they use a rule of 32, which states that the total of all your monthly debt payments cannot exceed 32% of your monthly income. When debt ratios approach 40%, the chances of being denied credit or a loan are high.

Calculator Definitions

The variables used in our online calculator are defined in detail below, including how to interpret the results.

Sources of Income:

In this section of the calculator, you are going to list your monthly sources of after tax income.

Monthly Income After Taxes ($ / Month)

This is your monthly household income after taxes. This monthly figure would include income from all sources, including the income from a spouse or partner.

Other Monthly Income ($ / Month)

If you have any other reliable source of monthly income, then list it here. Keep in mind this value needs to be stated on an after-tax basis.

Monthly Debt Payments:

In this next section of the calculator, you are going to enter all of your monthly debt payments, including installment loans and personal loans.

Mortgage Payment ($ / Month)

This is the monthly mortgage payment you make each month, including the payment of any property taxes.

Monthly Rent ($ / Month)

If you don't own a home and you are paying rent each month, then enter that amount here.

Car Loans / Lease Payments ($ / Month)

This is the total of all the car loans or car lease payments you make each month.

Personal Loans ($ / Month)

If you have any personal loans, then enter your monthly payment on those loans here.

Credit Cards Minimums ($ / Month)

If you are making minimum payments on a credit card, then enter that amount here because this type of arrangement is similar to a loan. If you're paying off the balance on your credit card each month, then you would not enter that amount here.

Student Loans ($ / Month)

Enter your monthly student loan payments, if any, in this section of the calculator.

Other Debt ($ / Month)

If you're making any other payment on debt that has not been previously discussed, then enter that amount here.

Total Monthly Income ($ / Month)

This is the total of all your existing sources of monthly income. This is the money you earn each month that can be used to pay off your debt.

Total Monthly Debt Payments ($ / Month)

This value is the total of all the monthly payments you entered for existing loans.

Debt Ratio

This is your current debt ratio, which is the total of your monthly debt payments divided by your monthly income. Values over 40% indicate you might have difficulty making payments on any additional debt or loans.

Debt Ratio Calculator

Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor. The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.

Moneyzine Editor

Moneyzine Editor