Calculate your debt-to-income ratio

We offer you a free tool to calculate your debt-to-income ratio quickly and easily.

By calculating your debt-to-income (DTI) ratio, you can determine if your debt is healthy or problematic in addition to estimating your chances of being approved for credit.

Tool provided by

Debt Ratio Calculator

Income

Your income before taxes

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Alimony (received)

per

Family benefits

per

Other income

E.g. self-employer work, pensions, employment insurance, government benefits, etc.

per

Home expenses

Mortgage / Rent

per

Municipal and school taxes (if applicable)

per

Heating expenses (Hydro-Quebec)

per

Condo fees (if applicable)

For calculation purposes, only 50% of condo fees are included. Please enter the full amount here.

per

Car expenses

Car payment

Monthly payment or lease amount

per

Payment for another vehicle

(2nd car, motorcycle, snowmobile, boat, etc.)

per

Debt

Credit cards (balance)

For the purposes of the calculation, we estimate that you must repay 5% of your balance each month

Credit margin (balance)

For the purposes of the calculation, we estimate that you must repay 5% of your balance each month

Personal loans (monthly payments)

per

Student loans (monthly payments)

per

Other debts (monthly payments)

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Why Calculate Your Debt-To-Income Ratio?

Calculating your debt-to-income ratio is the first step to assess your financial situation

Why Calculate Your Debt-To-Income Ratio?

Your debt-to-income (DTI) ratio is a number that is calculated by dividing your debt payments and financial obligations by your total income. This number is expressed as a percentage.

A low ratio means that you have a lower amount of debt relative to your income. The higher your ratio, the more debt you have relative to your income. This information is important to consider when deciding whether or not to take on additional debt.

It is important to calculate your debt-to-income ratio regularly to ensure that you are managing your finances responsibly. If your ratio is high, it could be a sign that you need to make changes in order to reduce your debts. This could include things like reducing spending or cutting back on certain expenses.

On the other hand, a low DTI ratio could indicate that you are in a good position to take on additional debt if needed.
How is the Debt-to-Income Ratio Calculated?

Calculating your debt-to-income ratio is similar to making your budget, but for your debts only

How is the Debt-to-Income Ratio Calculated?

The calculation of the debt-to-income ratio is relatively simple: it is a question of determining how much of your income must be devoted to your financial obligations.

Financial obligations include taxes, your housing costs, your car payment and the minimum payment on your debts.

Since the debt-to-income ratio is generally calculated for one person, it is important to enter only the part of the amount for which you are responsible. For example, if your rent is $1200 per month, but you are two people paying it, you would enter $600 (if you pay 50% of the amount).

The debt-to-income ratio thus represents the percentage of your income that is already “reserved” for the payment of your firm commitments. A debt ratio of 40 means that 40% of your income (before taxes) goes to the payment of these commitments.
What is a Good or Bad Debt-to-Income Ratio?

Your debt-to-income ratio, with your credit report, are the most important indicators for lenders

What is a Good or Bad Debt-to-Income Ratio?

A debt-to-income (DTI) ratio is used by lenders when assessing a loan applicant’s ability to take on new debt. A good debt-to-income ratio is typically below 40%. This ratio is used by lenders to assess an individual’s ability to pay back a loan.

If a borrower’s DTI is higher than 40%, it can indicate that they are overextended and may have difficulty managing their finances. Additionally, a high DTI may limit a borrower’s ability to qualify for a loan or other forms of credit.

If your debt-to-income ratio is above 40%, you may need to start taking the necessary steps to lower your debts.
Who Looks at the Debt-To-Income Ratio?

Lenders will want to know your debt-to-income ratio but you should also keep an eye on it at all times

Who Looks at the Debt-To-Income Ratio?

The debt-to-income ratio (DTI) is an important financial metric that helps lenders, landlords, and other creditors assess the ability of a potential borrower to meet their financial obligations.

Lenders are the primary group of people who look at a borrower’s debt-to-income ratio. Banks and other lenders use the DTI to evaluate a potential borrower’s creditworthiness. Generally, the higher the debt ratio, the higher the risk the lender takes on in lending money to the borrower.

Landlords will sometimes look at the debt-to-income ratio of a potential tenant. When a potential tenant applies for a rental, the landlord will usually review the DTI as part of the application process.

Contrary to popular belief, the debt-to-income ratio does not affect your credit score. Credit bureaus do not take your income into consideration when calculating your score.
What is the Difference Between a Credit Score and a Debt-To-Income Ratio?

Your debt-to-income ratio is not linked to your credit report or credit score

What is the Difference Between a Credit Score and a Debt-To-Income Ratio?

Credit score and debt-to-income ratio are two important factors that lenders consider while evaluating a loan application.

A credit score is a three-digit number that reflects a person's creditworthiness. It is based on a person's credit history, which includes their payment history, the amount of credit they have used, and their credit types. Credit scores range from 300-850, and the higher the score, the better the chances of being approved for a loan.

In contrast, a debt-to-income ratio is an indicator of how much of a person's income goes towards debt repayment. It is calculated by dividing total monthly debt payments by total monthly income. Lenders prefer a debt-to-income ratio of 40% or less, as it indicates that the borrower is financially stable and has the capacity to repay the loan.
How to Improve Your Debt-To-Income Ratio

Improving your debt-to-income ratio is possible as long as you have a plan

How to Improve Your Debt-To-Income Ratio

One of the best ways to maintain a good debt-to-income ratio is to pay down high-interest debt (the avalanche method). High-interest debt, such as credit card debt, can quickly eat away at a consumer’s income, making it difficult to manage monthly expenses. Paying down high-interest debt can decrease the total amount of debt payments, helping to lower the DTI ratio.

Another way to maintain a good debt-to-income ratio is to increase income. Increasing income can help to decrease the DTI ratio by offsetting the amount of debt payments. This can be done by taking on a second job or finding freelance work. It can also be done by increasing the amount of overtime hours worked or asking for a raise or promotion at your current job.

Need Help?

If you are worried about your level of debt, you can get a free consultation with a financial reorganization advisor by visiting pierreroy.com or by dialing 1 877 796-3427.

Question?

If you still have questions about your debt-to-income ratio, you can write to us at question@debt-ratio.ca.

À la recherche d'une version française de cet outil? Rendez-vous au Ratio-Endettement.com

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Debt Ratio Calculator

Income

Home expenses

Car expenses

Debt

Error

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