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Debt to Income Ratio Calculator

A debt to income ratio (or debt calculator)  is a measure of financial leverage that indicates the proportion of debt an individual has in relation to their earnings. Debt to income ratios are often used by lenders when deciding whether or not to offer credit to individuals and businesses.

A debt to income ratio can be calculated for any type of debt, including mortgages, student loans, car loans, and credit card debt. It is used by lenders to measure an individual’s ability to make regular loan payments while maintaining other financial obligations. To optimize your ability to reduce debt look at a debt calculator with amortization.

Debt to Income Ratio Example

For example, if you have a total monthly income of $5,000 and monthly debt payments of $3,000, your debt to income ratio is 60%.

The higher the amount of total monthly income compared to the sum of all monthly debts, the lower this figure will be. A low debt to income indicates that you have a low risk of default on your debts.

This debt calculator helps you understand where your money is going – toward interest or principle. 

Debt amortization (or debt snowball calculator) helps you understand how best to manage your money on a monthly basis. Some individuals turn toward debt services or debt consolidation but there may be a better way. Contact 101 Financial to speak to an instructor on how to learn to manage your money and build wealth without making any more money.Decrease Your Debt to Income Ratio

Learn More

For more information on debt to income ratios and how to decrease yours, reach out to 101 Financial.

Debt to Income Ratio Calculator
Debt to Income Ratio Calculator

Excellent! While you should pay off your debt as soon as possible, this debt to income ratio should allow you to live the lifestyle you want without major constraints.
Healthy. You should avoid incurring more debts, and might have a problem getting approved for a mortgage or yet another loan. Still, you are in a relatively good situation.
Troubling. You probably won't get approved for any additional loans; you should start working on a plan that will help you reduce your debts.
Dangerous. Such a debt to income ratio indicates financial trouble. You should devote as much money and energy as possible to pay off your loans.
Extremely Dangerous. More than half of your income is used to pay off debts and mortgages. If you're not following a strict payment plan yet, don't hesitate to consult a financial advisor and get professional help.