Debt-to-Income Calculator
Debt-to-income compares your monthly debt payments against your gross monthly income. It is one of the first figures a lender looks at.
Formula
DTI = total monthly debt payments ÷ gross monthly income × 100
- Include mortgage or rent, loans, cards and student loan payments
- Gross income, before tax
£900 of payments on £3,000 gross: 900 ÷ 3,000 × 100 = 30%
The Calculation
DTI = Monthly debt payments ÷ Gross monthly income × 100
£1,200 of debt payments against £4,000 of gross monthly income gives a DTI of 30%.
Include mortgage or rent, loan and car finance payments, credit card minimums and student loan repayments. Exclude utilities, food, insurance and other living costs — those belong in affordability, not DTI.
What Lenders Look For
- Under 20%: comfortable
- 20–35%: generally acceptable
- 36–42%: starts to limit options
- Above 43%: many lenders decline
UK mortgage lenders also apply an income multiple, typically 4 to 4.5 times salary, and must stress-test affordability against a higher interest rate than the one on offer.
Improving the Ratio
Only two levers exist: reduce monthly debt payments, or increase income.
Clearing the debt with the highest monthly payment improves DTI fastest, which is not necessarily the one with the highest interest rate. A small loan near its end may be costing little in interest while still weighing heavily on the ratio.
Avoid taking on new credit in the months before a mortgage application: a car finance agreement signed shortly beforehand can materially reduce what you are offered.
Quick Reference
| DTI | Assessment |
|---|---|
| Under 20% | Comfortable, strong borrowing position |
| 20–35% | Manageable for most lenders |
| 36–42% | Acceptable but scrutinised |
| 43–49% | Stretched; many lenders decline |
| 50% and over | Severe; debt advice is worth seeking |
Frequently Asked Questions
- What is a good debt-to-income ratio?
- Under 36 per cent is generally comfortable. Above 43 per cent many lenders will decline, though criteria vary.
- Should I use gross or net income?
- Gross, before tax. That is the convention lenders use, so calculating on net income will make your ratio look worse than theirs.
- Do utility bills count as debt?
- No. DTI covers debt repayments only: mortgage or rent, loans, car finance, card minimums and student loans. Living costs are assessed separately.
- How do I improve my ratio quickly?
- Clear the debt with the largest monthly payment, which is not always the one with the highest rate, and avoid new borrowing before applying.