What this calculator does
Debt-to-income compares what you must pay on debts each month against what you earn. Lenders use it as a first filter on serviceability, and it is just as useful as a private check on whether a new commitment is sensible.
Two versions are reported. The back-end ratio counts all debt payments, and is the one most lenders assess. The front-end ratio counts housing only, and is the figure behind common guidance about keeping housing costs to around a third of income.
The formula
Both ratios divide monthly debt commitments by gross monthly income. Only required minimum payments count: not discretionary spending, and not the balances themselves. A large credit card balance with a small minimum payment affects the ratio only by that minimum.
| Term | Meaning |
|---|---|
| DTI | Total monthly debt payments ÷ gross monthly income. |
| Front-end | Housing payment ÷ gross monthly income. |
| Gross income | Income before tax and deductions. |
The inputs explained
| Field | What to enter |
|---|---|
| Gross monthly income ($) | Gross monthly income before tax, including reliable secondary income. Lenders usually discount variable income such as bonuses or overtime. |
| Housing payment per month ($) | Rent or mortgage payment, plus property rates, insurance and strata if you own. |
| Other debt payments per month ($) | Minimum monthly payments on car loans, personal loans, student loans and credit cards. Use the required minimum, not what you actually pay. |
When to use it
Checking whether you would qualify
Run the ratio including the new loan payment you are considering. If it pushes you past your lender’s ceiling, the application is likely to fail before it reaches assessment.
Deciding what to pay off first
A small loan with a large monthly payment hurts the ratio more than a large loan with a small one. Clearing the first improves borrowing capacity out of proportion to the balance cleared.
Sanity-checking your own budget
The income left after debts figure is what remains for everything else: food, transport, saving, everything. If it looks thin, the ratio is telling you something regardless of what a lender would approve.
Planning a move
Try a higher housing payment and watch both ratios. The front-end figure is the one that tends to constrain how much house is comfortable rather than merely possible.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
Debt-to-income at different income levels
Fixed commitments of $2,200 in housing and $600 in other debts, against a range of incomes.
| Gross monthly income | Debt-to-income ratio | Front-end ratio (housing only) | Assessment | Income left after debts |
|---|---|---|---|---|
| $5,000 | 56.0% | 44.0% | High: likely to fail serviceability | $2,200.00 |
| $6,500 | 43.1% | 33.8% | High: likely to fail serviceability | $3,700.00 |
| $8,000 | 35.0% | 27.5% | Comfortable: most lenders accept up to 36% | $5,200.00 |
| $10,000 | 28.0% | 22.0% | Comfortable: most lenders accept up to 36% | $7,200.00 |
| $12,500 | 22.4% | 17.6% | Comfortable: most lenders accept up to 36% | $9,700.00 |
| $15,000 | 18.7% | 14.7% | Comfortable: most lenders accept up to 36% | $12,200.00 |
How much housing an $8,000 income supports
Holding income and other debts steady while the housing payment rises.
| Housing payment | Debt-to-income ratio | Front-end ratio (housing only) | Assessment | Income left after debts |
|---|---|---|---|---|
| $1,500 | 26.3% | 18.8% | Comfortable: most lenders accept up to 36% | $5,900.00 |
| $2,000 | 32.5% | 25.0% | Comfortable: most lenders accept up to 36% | $5,400.00 |
| $2,500 | 38.8% | 31.3% | Stretched: 43% is a common ceiling | $4,900.00 |
| $3,000 | 45.0% | 37.5% | High: likely to fail serviceability | $4,400.00 |
| $3,500 | 51.2% | 43.8% | High: likely to fail serviceability | $3,900.00 |
| $4,000 | 57.5% | 50.0% | High: likely to fail serviceability | $3,400.00 |
Questions
What is a good debt-to-income ratio?
Below 36% is widely treated as comfortable. Many lenders will go to 43%, and some higher with compensating factors such as a large deposit or substantial savings. Above that, approval becomes difficult and the budget becomes tight regardless.
Should I use gross or net income?
Gross: income before tax. That is the convention lenders use, so using net income would make your ratio look worse than the one being assessed.
Do credit card balances count, or just the payments?
The required minimum payment counts toward the ratio. However, many lenders separately assess your total credit limits as potential debt, so a large unused limit can still reduce borrowing capacity.
Does rent count as debt?
In this calculator, yes: enter it as the housing payment, since it is a required monthly commitment. Lenders treat existing rent differently when you are buying, because the rent will typically be replaced by the mortgage.
How can I improve my ratio quickly?
Clearing small loans with disproportionately large payments is usually the fastest route. Increasing income works too, but consolidating several payments into one longer-term loan can help the ratio while raising total interest: a real trade-off.
To see the loan a given repayment supports, use how much can I borrow. For the full housing cost, see the mortgage calculator.