How to Calculate a Debt-to-Income Ratio

Calculating debt-to-income ratio is fairly simple.

Lenders use your debt-to-income ratio (how much you owe on credit cards and loans compared with how much you earn) to help evaluate your creditworthiness.

Step 1

Add up your total net monthly income. This includes your monthly wages and any overtime, commissions or bonuses that are guaranteed; plus alimony payment received, if applicable. If your income varies, figure the monthly average for the past two years. Include any monies earned from rentals or any other additional income.

Step 2

Add up your monthly debt obligations. This includes all of your credit card bills, loan and mortgage payments. Make sure to include your monthly rent payments if you rent.

Step 3

Divide your total monthly debt obligations by your total monthly income. This is your total debt-to-income ratio.

Step 4

Take action if your ratio is higher than 0.36, which industry professionals would call a score of 36. The lower the better. Any score higher than 36 may cause an increase in the interest rate or the down payment on a loan you apply for.


When you tally your total monthly debts, use the minimum payment on your statements.


When calculating your income, a lender will only consider money from a job that you've been at for at least two years. Unreported earned income cannot be used in the calculation.