Understanding the Ways to Determine ‘Debt-to Income Ratio

To calculate your debt-to-income ratio

Debt-to-income ratio – DTI can measure an individual’s ability to manage monthly payment to eventually repay debts in the given term. It considers all the obligations like mortgage payments, car payment, credit card bills, student loan payment and other loan payments. Homula mortgage calculator helps you in scenarios where you are not sure if your DTI is where it should be or getting to know your home loan repayments.

How do you calculate household debt to income ratio?

To calculate household debt to income ratio, divide the total monthly debt payments by gross monthly income. Basically, it is comparing an individual’s debt payment to his or her overall income. Your gross monthly income is generally the amount of money you have earned before your taxes and other deductions take place.

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What is considered a good debt to income ratio?

A low ratio reveals a good balance between debt and income. Lenders use the ratio to determine the borrower’s ability to make installments and they believe that candidates with lower ratio are more likely to be successful.

Even though, in most cases, 43% is the highest ratio that can qualify a borrower for a mortgage, lenders prefer a number below 36%.

What does my debt to income ratio need to be to qualify for a car loan?

It is advisable to pay 20% of your monthly income after taxes on a new car. Important factors such as down payment, interest rate, and term of your loan determine whether or not you can afford to buy. For instance, if you pay Rs 1500 a month and another for an auto loan and Rs 400 a month for the rest of your debts, this equals to Rs 2000. Therefore if your gross monthly income is Rs 6000, then your debt- to income ratio is 33 percent.


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