Debt-to-income ratio: calculate it before a mortgage
Calculate monthly debt payments as a share of gross income and see why a lender’s affordability test involves more than one ratio.
Use monthly payments, not balances
Debt-to-income ratio (DTI) is total required monthly debt payments divided by gross monthly income, multiplied by 100. Include the proposed housing payment when comparing a mortgage scenario, plus other loan minimums. A credit-card balance is not the payment; use its required monthly payment. Lenders may define eligible income and debts differently.
Example with a housing payment
Suppose gross income is 5,000 per month, existing debt minimums are 450 and the proposed housing payment is 1,350. DTI = (450 + 1,350) ÷ 5,000 = 36%. Without the proposed payment, the existing-debt ratio is 9%. These describe different questions, so label which one you show.
Interpret alongside cash flow
A ratio can look comfortable while groceries, utilities, taxes or irregular expenses leave little spare cash. Test the full payment, not just principal and interest, and compare a smaller loan, higher down payment or different term. Lender thresholds and documentation differ by product and jurisdiction; a calculated ratio is not approval.
Try it and keep reading
Try your numbers in debt to income, mortgage. Then read the related guide for context and assumptions.