Debt-to-Income Ratio Calculator

Our Debt-to-Income Ratio Calculator is a powerful tool designed to help you assess your financial health. By comparing your monthly debt payments to your monthly income, it provides a clear picture of your current financial situation.

This easy-to-use calculator can help you determine if you’re in a good position to take on additional debt or if you need to focus on reducing your existing obligations.

Annual income before taxes ($):

Total monthly debt payments ($):

+ Optional: Give more detailed debt breakdown

Monthly Rent/Mortgage ($):

Monthly Car Payments ($):

Medical / Dental Bill Payments ($):

Alimony / Child Support Payments ($):

Monthly Credit Card Payments ($):

Student Loan Payments ($):

Appliance / Furniture Payments ($):

Other Loan Payments ($):

How to Use the Debt-to-Income Ratio Calculator:

Enter your total annual income before taxes in the “Annual income” field. Include all sources of income such as salary, bonuses, investments, and any other regular income.
Input your total monthly debt payments in the “Total monthly debt payments” field. This should include all recurring monthly debt obligations like mortgage/rent, car loans, student loans, credit card minimums, and other loan payments.
For a more detailed breakdown of your debts, click on “+ Optional: Give more detailed debt breakdown”. This will allow you to itemize your various debt payments.
Once you’ve entered your income and debt information, click the “Calculate Ratio” button.
Your Debt-to-Income Ratio will be displayed, along with a breakdown of your annual income, monthly income, and monthly debt.
The calculator will also provide an explanation of how your ratio was determined.
To recalculate with different numbers, simply change the values in the input fields and click “Calculate Ratio” again.

Remember: A lower Debt-to-Income Ratio is generally better. Most lenders prefer a ratio of 36% or less, with some allowing up to 43% for certain loans. If your ratio is high, consider ways to increase your income or reduce your debt to improve your financial health.

Example Calculation

Let’s say John has the following financial situation:

Annual Income: $60,000

Monthly Debt Payments:

Mortgage: $1,000
Car Loan: $300
Student Loan: $200
Credit Card: $150

Step 1: Calculate Monthly Income

$\text{Monthly Income} = \frac{\text{Annual Income}}{12}$ $\text{Monthly Income} = \frac{\$60,000}{12} = \$5,000$

Step 2: Calculate Total Monthly Debt

$\text{Total Monthly Debt} = \$1,000 + \$300 + \$200 + \$150 = \$1,650$

Step 3: Calculate Debt-to-Income Ratio

The formula for Debt-to-Income Ratio is:

$\text{Debt-to-Income Ratio} = \frac{\text{Total Monthly Debt}}{\text{Monthly Income}} \times 100\%$

Plugging in our values:

$\text{Debt-to-Income Ratio} = \frac{\$1,650}{\$5,000} \times 100\% = 0.33 \times 100\% = 33\%$

Therefore, John’s Debt-to-Income Ratio is 33%.

Interpretation: A Debt-to-Income Ratio of 33% is generally considered acceptable by most lenders. It falls below the common threshold of 36%, indicating that John’s debt levels are manageable relative to his income. However, there’s still room for improvement, and John might want to consider reducing his debt or increasing his income to lower this ratio further and improve his overall financial health.

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