Debt-to-Income Ratio Calculator
To see if you’re overextended on credit, use this calculator to compare your debt payments to your income.
Lenders, banks, and credit card companies often use your debt-to-income (DTI) ratio as a top qualifier when issuing loans. If you apply for the loan, the company lending the money will want to know that you can afford your loan payments. A lower DTI is always preferred, but if you have a high DTI it can be hard to get approved at all.
Debt-to-income is an easy way to measure your financial health. Check your DTI here before applying for loans to avoid a potentially costly dip in your credit score. Remember that anytime a creditor or lender completes a hard credit check or inquiry, your score can go down slightly. If your DTI is too high, it’s time to start focusing on debt repayment. Our trained credit counsellors can are here to help, so call them today at (800) 593-7305 for a free debt and budget assessment.
How to calculate debt-to-income ratio
DTI is a ratio of your total monthly debt payments compared to your total monthly income. Simply add up all of your debt and insurance payments, then divide it by your total monthly income and multiply it by 100 to get your DTI. The calculator below will explain everything to include when calculating your DTI.
Find Your DTI Ratio
What does your debt-to-income mean?
| DTI | What it means |
|---|---|
| 36% or less | Your debt amount compared to your income is good. Getting approved for loans and financing should be relatively easy at this level, provided you have a credit score high enough to qualify. At this level, you should have no problem maintaining your financial stability. |
| 37-41% | This range would be considered a normal amount of debt relative to your income. However, if you plan on applying for loans in the future, you should focus on paying off some other existing debt. That will make it easier to get approved at the lowest rates available to you. |
| 41-45% | With this much debt, it will be difficult to get approved for loans and credit lines. Start taking action now, stop using credit cards and pay off some balances as quickly as you can. Debt consolidation or other debt-relief options could help pay these balances off more efficiently. |
| More than 50% | This is too much debt and is probably impacting your total financial health. With this much owed in monthly debt payments, and given the monthly income there is to work with, you will likely need help to get out of debt. Options like debt consolidation loans may be unavailable to you as your DTI is too high. Call (800) 593-7305 to speak with a trained credit counsellor who can explain the available options. |
Underwriting loans and how lenders use debt-to-income
When you apply for loans and lines of credit, the lender will go through what is known as an underwriting process. This means an agent will assess your creditworthiness by looking at your income, debt, and credit information. A large part of that process involves your DTI. If your debt-to-income ratio is 41 percent or more (including the new loan payment) then most lenders will reject the application. There are alternative lenders out there that may extend credit to borrowers with ratios as high as 45 percent. However, they charge extraordinarily high-interest rates and have more restrictive terms.
If your DTI is a contributing factor to your loan rejections then you’ll need to develop a repayment plan to reduce your debt before applying for more credit. Often, it’s the high-interest credit cards that raise people’s DTI’s into higher percentages. If you’re carrying multiple credit card balances you should speak to one of our trained credit counsellors about ways you can reduce your DTI ratio today.
How much debt does it take before Canadians look for help?
Deciding whether or not you need help to get with your debt is never an easy decision. However, knowing your DTI can help make that decision easier. If your debt-to-income ratio is too high and you aren’t able to get approved for loans, you won’t be able to consolidate the debt alone. Non-profit credit counselling is a great place to start if you find yourself in that situation. You’ll get free, unbiased, professional advice regarding the best ways to get out of debt.
To get a better idea of how Canadian debt averages stack up, take a look at the interactive map below based on the provincial and territorial average. The info on this map may reflect your personal situation and shed some light on getting help. If you’d like to know more about your options, speak with a trained credit counsellor today for a free and confidential assessment.
